Aussie growth slows

Today's Highlights

Shares slide after China takes the lead

Aussie growth slows

US rate hike date - expectations shifting

FX Market Overview

Poor manufacturing data from China started a slide in share markets yesterday and that contagion hit the European and US markets before the day was over. However, credit ratings agency, Fitch has forecast 6.5 to7% growth in Chinese economic activity this year and 6 to 6.5% growth in 2016. Most Finance Ministers would sell their grandmothers for that kind of performance. Mind you, they are politicians so they would probably sell their grandmothers for an extra vote but you get my point. The UK is growing at around 2.5%, the US 2%-ish and Europe is probably shrinking. It is the comparison that investors make between these numbers and the 9-11% growth we used to see in the over-inflated-government-backed Chinese construction boom that is showing up as disappointment.

Nonetheless, the drop in demand in China is impacting other economies. Australia's growth slowed to just 0.2% in the 3 months to June; lower than expected and sharply lower than First Quarter growth of 0.9%. The Sterling - Australian Dollar arte which dipped to 2.14 last week, is back up in the 2.19 area as I write and there is scope for further gains as long as the Pound doesn't get a nose-bleed at these heady heights.

The US Dollar took a small stumble yesterday after the ISM manufacturing sentiment index dropped to its lowest level since May 2013. This hasn't stopped talk of a September interest rate hike in the US but there are more analysts and commentators pushing their expectation of the timing of that 1st hike back to December. I suspect it will be 2016 before the Fed starts to hike, given the turmoil in Asian markets and the unconvincing nature of US economic data.

We get US private payroll data later today and the release of the Federal Reserve's Beige Book. It sounds uninspiring but it is a regional view of how USA Inc is doing. That will influence the September Federal reserve meeting because it forms part of the agenda.

Sterling awaits the construction sector purchasing managers index and that is forecast to be positive. Any reading above 57.2 on the index will be Sterling positive.

Oh and don't bother forecasting anything beyond 28th September because, the world is going to end that day. So say John Hagee and Mark Britz; two American evangelists. It is all to do with Blood Moons, ISIS, a flood at Walmart and a bunch of other prophecies and has nothing to do with the books these people are trying to promote in any way whatsoever, so it must be true. Good luck everyone.