This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Chinese PMI Could Trigger Volatility for Traders Thursday

NEW YORK (The Street) - A key indicator of Chinese manufacturing could set the tone for global equity markets tomorrow, with growth in the world's second largest economy crucial to the outlook for emerging markets.

Emerging market woes shook global equities in January, contributing to a 5% slide for the S&P/500 amid concerns of a brewing crisis among indebted nations.

Chinese manufacturing fell to a six-month low of 49.5 in January, further triggering fears of a "hard landing" for the world's second largest economy as it faces a mountain of local government debt and a potential property bubble.

But the HSBC PMI is expected to remain in expansion territory around the 50 mark for February, with most fund managers and economists skeptical of an impending dive for Chinese growth.

"We do not expect a hard landing or systematic financial crisis in China in 2014, various structural issues notwithstanding," UBS economist Tao Wang told clients. He expects Chinese GDP to grow about 7.8% this year, as improving exports and recovering consumption offset the slowdown in infrastructure investment.

Yet Wang acknowledges the risk of a sharp deleveraging or slowdown in Chinese growth. China is the largest emerging economy, contributing more than a quarter to global GDP growth since 2010. This means such a scenario would likely affect "everyone and every market" Wang warned. "The three main channels through which the impact will be spread are trade ties, financial linkages, and market contagion," he said.

The economist noted financial markets contagion from any hard landing could spread beyond countries with twin deficits and high leverage, despite the relatively smaller direct trade exposure of the US and Europe to the region.

Risk barometers such as the Aussie dollar and copper are expected to show high sensitivity to any surprise result from Chinese PMI tomorrow, with copper seen as a bellwether for global electronics and consumer demand.

Traders said they expected volatility in US equities on Thursday from any downside surprise.

 

-- By Jane Searle in New York

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $123.25 0.00%
FB $83.30 0.00%
GOOG $548.34 0.00%
TSLA $185.00 0.00%
YHOO $45.10 0.00%

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs