London pre-open: Sharp drop seen at start of trading
London equities are being called to start the morning sharply lower following the release of two reports on the state of Chinese manufacturing, with similar surveys scheduled for release later in the day in the Eurozone and Stateside.
Spreadbetters were calling the FTSE 100 to start the day off by by up 104 points, with even larger losses expected in the Dax-30 and Cac-40.
As of 07:13 the Shanghai Stock Exchange Composite Index was losing 2.20% to reach 3,135.44 points.
The 'official' Chinese manufacturing sector purchasing managers´ index plumbed a three-year low in August, at 49.7, as expected by the consensus, folowing a print of 50 in the month before.
In parallel, the Caixin China manufacturing PMI hit a six-and-a-half year low of 47.3, which was also as expected.
Commenting on the above figures, Julian Evans-Pritchard, China economist at Capital Economics, said: "We don’t think the readings are cause for alarm. For one, China’s economy is increasingly driven by service sector activity, which still appears healthy despite a fall.
"We suspect the latest bout of weakness mostly reflects temporary disruptions to factory output due to restrictions on polluting activities ahead of this week’s Victory Day parade in Beijing rather than a deterioration in underlying economic momentum."
Be that as it may, Hugh Young, the emerging markets fund manager at Aberdeen Asset Management recommended stay clear of that country´s stock market, predicting that the market turmoil could continue for “at least” a few more weeks, according to The Times.
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