China stumbles while Syriza falls

In mid-morning trading the FTSE 100 is lower as the collapse in the Asian markets has sent traders running for the exit.

Shenzhen stock exchange
Source: Bloomberg
  • Athens stares into the abyss
  • China’s manufacturing meltdown
  • US recovery hurt by Chinese slowdown

China and Greece have been dominating the headlines in recent months, and now they have both taken a nasty turn at the exact same moment, leaving traders terrified as panic selling becomes widespread. Greece is staring into the political abyss and China is cooling off at an alarming rate.

Alexis Tsipras is trying to shake out the extreme left-wing elements in the Syriza party by stepping down and calling an election, but it’s a big gamble and he may not get back into power. Politics in Greece are so fractured it’s difficult to imagine any party getting into office and staying there for a prolonged period. Dealers fear that Greece is doomed to a future of short-lived ineffective governments  which will add to its financial woes.

Copper is being crushed under the weight of the depressing manufacturing numbers from China, and Beijing must go back to the drawing board and come up with an even more vigorous plan to keep the economy growing at a high rate. China has been on a mission to keep up the illusion of a gradual slowdown, but dealers aren’t buying it anymore and the market isn’t waiting around for the recent yuan devaluations to kick in.

We are expecting the Dow Jones to open 70 points lower at 16,920. The selling frenzy in Asia is weighing on the US futures market, and the dismal manufacturing figures from China leaves the door open for more devaluing of the yuan.

Throughout the past year China has been very aggressive in its stimulus schemes, but they still aren’t enough to sustain high levels of growth. The only option for Beijing will be additional monetary easing which will effectively put the brakes on the US recovery. 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Een artikel zoeken

Form has failed to submit. Please contact IG directly.

  • Ik wens per e-mail informatie van IG Group bedrijven te ontvangen over handelsideeën en IG's producten en diensten.

Voor meer informatie over hoe wij uw gegevens mogelijk kunnen gebruiken, bekijkt u ons Privacy- en toegangsbeleid en onze privacy website.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.