European indices lose more ground on China data – Spread Betting News

June 23, 2011 - PRLog -- The FTSE 100, DAX and CAC all lost around 0.7% in early trading on Thursday as investors tracked late falls in US markets last night and traded with caution after data from the flash HSBC PMI showed that Chinese factories barely expanded in June.

It is the Chinese data that is mostly weighing on today’s trading session. The HSBC PMI reading eased to 50.1 in June, marking the lowest reading in nearly a year. A slowdown in growth in China is a growing concern amongst investors, particularly those with exposures to commodities and resource equities. Naturally therefore, we have seen a move by investors to downsize positions in the resource sector today, with the miners and oil firms the worst hit.

Fed fails to inspire traders

The late sell off in US markets last night has also weighed on short term trading today in European equities. The Dow Jones lost nearly 100 points in the final hour of trading yesterday, putting a halt to four days of consecutive gains. The Fed cut its growth forecasts but refrained to detail how it plans to contain this unexpected slowdown. Instead, the Fed implied that some of the pressures affecting the US economy are temporary, believing growth to pick up towards the end of the year into 2012. However it also downgraded its 2012 growth forecast.

Whilst the downward growth revision was not a surprise in the slightest, investors had hoped for some reassurance from Ben Bernanke that the Fed was prepared to act if there was a continued slowdown in growth. We did not get this and after four consecutive days of gains for US equities, investors were happy to use this as an excuse to cash in the gains in their US stock gains and European equities have followed suit today.

EU Summit eyed

The issue of Greece continues to be at the forefront of investors’ minds and European banks continue to suffer on exposure fears to sovereign debt. Lloyds Banking Group traded at a new 16 month low tday in reaction to this and threatened a break below the 45p level, which would mark a near two year low if reached. The EU summit which starts today is also going to keep investors alert in case there is any definitive line made on Greece, the next tranche of loans or what a second bailout may look like. The markets could certainly trade sensitively to any Chinese whispers that may emerge concerning Greek aid.

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As a group, City Index transacts in excess of 1.5 million trades every month in over 50 countries worldwide. We provide a wide range of instruments including forex, CFD trading and spread betting. For more information, visit http://www.cityindex.co.uk/.