US session starts with indices pointing to a downside

The US session has commenced with major indices pointing heavily to a downside, following a trend seen throughout the European markets, with these losses basically being inspired by further worries about the China economy weighing on investor sentiment globally. The PMI data from China overnight continued to disappoint and while a contraction was already expected, the markets just received further clarification that the China economy is looking incredibly exposed to falling below the government’s GDP target of 7% by the end of the current quarter.

The concerns over the China economy are continuing and showing no signs of letting up and I view the comments from IMF head Christine Lagarde that the global markets need to be more vigilant towards China risks as a subtle reminder that economies should prepare themselves for an impending decline in China trade. When you consider that a decline in China trade will weigh further downside pressures to a variety of different economies around the globe, this basically means that the global markets in general will remain at risk to further declines in the future.