China's manufacturing sector has weakened. The stock market is consolidating after falling last week

The beginning of February for the markets may start with a slight disappointment regarding the global economic recovery. China's Caixin Manufacturing Index slowed in January, falling to a seven-month low of 51.5 when the forecast was 52.7. Production and new orders were growing at a slower pace, while export sales decreased for the first time in six months as COVID-19 resumes worldwide. Retail sales showed the biggest slowdown since May last year. Employment fell after stabilizing in December. Business sentiment hit its lowest level in eight months.

So far, stock indices in China have ignored the indicators and closed the Asian session with a slight plus. But G10 government bonds show negative dynamics, which may subsequently affect the stock market.

A report from the Federal Statistics Office of Germany showed decreasing sales of 9.6% compared to the previous month, which is much worse than the market one. This is the first decline in 3 months due to repeated restrictions related to the pandemic. Against this background, the European currency decreased again. The credit market hasn’t shown significant fluctuations yet.

Last week, the fall in major stock indices was the largest in the past three months. The MSCI Emerging Markets Index decreased by 4.5%, the worst since March last year, as delays in vaccine supply and fluctuations caused by retail traders in the US markets eroded risk appetite. But banking giants such as Goldman Sachs Group Inc., Societe Generale SA, and Loomis Sayles & Co see no reason to sell on a large scale, expecting stock prices to rise over the long term.

Main market quotes:

S&P 500 (F) 3,731.38 +26.13 (+0.71%)

Dow Jones 29,982.62 -620.74 (-2.03%)

DAX 13,566.85 +133.98 (+1.00%)

FTSE 100 6,449.99 +42.53 (+0.66%)

USD Index 90.665 +0.130 (+0.14%)

• – Caixin Manufacturing PMI in China (Jan) at 03:45 (GMT+2);
• – German Manufacturing PMI (Jan) at 10:55 (GMT+2);
• – Eurozone Manufacturing PMI (Jan) at 11:00 (GMT+2);
• – UK Manufacturing PMI (Jan) at 11:30 (GMT+2);
• – ISM Manufacturing PMI in the US (Jan) at 17:00 (GMT+2).

by JustMarkets, 2021.02.01

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.