OVERNIGHT MARKETS ROUND UP – 03/02/14

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After the savage sell-off global bourses have experienced since the turn of the year, many investors are starting to question the sustainability of the economic recovery. Dominating the thoughts of market participants has been several factors including; Chinese growth concerns, tapering fears, earnings and emerging market fears. Unfortunately, one of these key factors has been called into question before European indices even open, sending the equity-futures lower.

 The MSCI Asia Pacific Index has lost some 1.1 percent in value after a slowdown in Chinese manufacturing growth. This is another blow in what is becoming a long line of missed forecasts and poor data. The worrying Chinese data is having a negative effect broadly across the region with the Nikkei trading another 2 percent lower last night, a full 10 percent lower than the 6-year high reached on December 30th 2013. This equates to the biggest monthly loss seen amongst developed economies. 

This Thursday marks the latest opportunity for Bank of England Governor to discuss interest rates in detail, with a number of economists predicting Carney to put the process of raising interest rates into motion. Currently set at 0.5 percent, a number of banks are predicting the strongest growth since 2007 will prompt the U.K. to lift its benchmark rate in early 2015. This would be some 3 months before the data that Fed Chairman Yellen plans on raising rates. Despite this, on January 25th at the Davos World Economic Forum, Carney stressed that “There’s no immediate need” to raise rates, and that any eventual increases will be gradual.

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