The risk sentiment improves after China’s PMI figure is revealed - Market Overview

The risk sentiment improves after China’s PMI figure is revealed  - Market Overview

China’s PMI for July exceeded the result from June (54.9 vs 50.3), leading to improved market sentiment, especially after the slowdown reported by other leading Asian indicators.

However, in Europe, the published PMI results for July were more affected by the COVID-19 delta variant, revealing less impressive results.

This afternoon the ISM non-manufacturing is scheduled for publishing in the United States. The markets expect a 60.5 figure, slightly higher than the 60.1 recorded the previous month.

However, the most anticipated figure for today will be the ADP Non-farm employment change, with a job creation forecast of 695k. This report is published two days before the non-farm payroll and the unemployment rate. It could set the tone for financial markets, as employment is one of the main objectives of the Federal Reserve's monetary policy. A substantial change in the forecast figure could prove relevant for assets such as the U.S Treasury bonds and the USD.

Today the markets have stabilized thanks to the better performance of the Asian stock markets after the publication of the Caixin PMI for services in China. However, yesterday, the market performance was more typical of risk aversion with falls in USD/JPY below 109.00 and setbacks in commodity markets.

Oil fell almost $3 on the day due to fear of new mobility restrictions, potentially affecting global demand for crude. After a week of an upward correction, black gold retreated, and it approached the support zone located around 67.20, below which it would open the way to falls of greater depth. The EIA's inventory figure scheduled for publishing this afternoon could impact prices in case inventories rise above the forecast.

A weaker performance is also noticeable in the case of Copper. After the recovery, which began on July 20, Copper lost ground again, approaching important levels of support located at 4.36 in the first place and then in the 4.15 area. Should it reach these levels, it could lead to greater corrective movements.

Sources: Bloomberg, reuters.com.

This information/research prepared by Miguel Ruiz (“the research analyst”) does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.

The research provided does not constitute the views of JME Financial Services (Pty)Ltd nor is it an invitation to invest with JME Financial Services (Pty)Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.

As of the date the report is published, the research analyst and his/her spouse and/or relatives who are financially dependent on the research analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities).

The research analyst in not employed by JME Financial Services (Pty)Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest.

The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.

JME Financial Services (Pty) Ltd trading as ZA.CAPEX.COM acts as intermediary between the investor and Magnasale Trading Ltd, the counterparty to the contract for difference purchased by the Investor via ZA.CAPEX.COM, authorised & regulated by the Cyprus Securities and Exchange Commission with license number 264/15. Magnasale Trading Ltd is the principal to the CFD purchased by investors