A look ahead for the day ahead in Sonali Desai’s European and global markets
China’s faltering economic recovery has once again dominated financial market activity, dampening risk sentiment and buoying the dollar in relatively muted moves after the July 4 US bank holiday.
The Caixin/S&P Global private sector purchasing managers’ index hit a five-month low in June, reflecting growing vulnerabilities in a once resilient sector of the huge economy.
The data quickly reversed a one-day gain in the Chinese yuan, which on Tuesday appeared to finally heed a string of stronger-than-expected central bank mean adjustments and other measures to slow its decline.
Beijing’s export restrictions on two widely used metals in semiconductors and electric vehicles continued to dominate the headlines, sparking sharp comments in the domestic press ahead of Treasury Secretary Janet Yellen’s visit to China.
But the news that Tesla and its biggest Chinese competitor BYD posted record deliveries of Chinese-made electric vehicles in the second quarter suggests demand is alive and well in at least one segment of the economy.
The calendar for Europe and the UK is dominated by the services final and June composite PMIs, which are also expected to confirm a slowing of the consumption-led economic recovery.
The US is due to release factory orders for May but the focus will of course be on the minutes of the June Federal Reserve meeting which led to a pause in tightening while adding two more rate hikes to the outlook.
Key developments that could impact markets on Wednesday:
Eurozone, UK, final June services PMIs and composite PMIs, EZ producer prices in May
ECB politician and French central bank governor Francois Villeroy de Galhau addresses a financial conference in Paris
US Factory Orders for May, FOMC Minutes for June
(Reporting by Sonali Desai; Editing by Jacqueline Wong)
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