Stock markets in the United States and Asia were in for a free fall at the start of the trading week along with sudden dip in oil futures as manufacturing data from both China and USA were disappointing. The slow pace of growth in both these markets was the main reason for gloomy sentiment in the markets. Even the Canadian dollar fell to its lowest levels in a decade chiefly due to fall in crude futures across the world fell drastically. While the industrial average of Dow Jones fell by 91.66 points, the Standard and Poor Index fell by 5.9 points, while Nasdaq’s composite index fell by 12.90 points.
To offset these financial issues, the Federal Reserve is likely to increase interest rates by the year end after a decade, as slow growth and low employment continues to plague the nation if the Chinese market continues to sink further.
European markets continue their upswing
The markets of Netherlands, Spain and Italy have all reported healthy growth this fiscal year in spite of Greece’s bankruptcy. Stock markets across the globe have fallen by 0.3 percent and even Nikkei’s futures market was down by 0.6 percent. The growth of Italy was the strongest after four years of continuous slump and it shows promise of better growth throughout remaining part of the year.
Fall in commodities markets and currency markets
Worldwide oil prices are tumbling due to low production in United States and China followed by high production by OPEC nations. The high production among OPEC nations is an attempt by them to defend their market share. The crude oil futures in US markets fell by 3.8 percent due to lowest price per barrel at $45.8 in four months and also at Brent it fell by 4.9 percent. Other metals that took a beating were gold and copper leading to decline in commodity led currencies like Canadian dollar and Australian dollar.
While the Canadian dollar fell to its lowest level in 11 years, the Australian dollar also fell, to its lowest in six years. The Euro also suffered a short setback due to the tumble in Greek stock markets, which put pressure on the currency. The yield from US Treasuries too have fallen to two month low due to continuous fall in manufacturing data from both US and Chinese markets. If the stock markets continue this downtrend, then the Federal Reserve will hike the interest rates after its September meeting to improve the markets.