Chinese concerns reemerge, as market sentiment sours ahead of predicted US factory orders slump

Posted by Joshua Mahony -
Scope Markets
  • Chinese concerns reemerge as services growth declines
  • AUD sharply lower as RBA keep rates steady
  • European PMI continues weakening theme
  • Inflation concerns grow as crude hits highest level since November 2022
  • US factory orders expected to slump into worst reading since Covid collapse

Recent gains in China have been unwound overnight, with the latest Caixin services PMI tumbling into an eight-month low overnight. Coming off the back of Monday’s relief rally on fresh real estate support, and a debt extension for homebuilder Country Garden, we have seen the Hang Seng revert back to the pessimism tone that has dominated recent weeks. Country Garden did make two multi-million dollar interest payments overnight, staving off default for now. However, with the China developer staring at a debt pile reportedly around $196 billion, any short-term reprieve on their debt payment timeline does little to help eradicate the ongoing risk of default.

The Australian dollar has been hit hard overnight, with the outgoing RBA Governor Phillip Lowe opting to keep rates steady for the third consecutive meeting. Coming at a time when Chinese fears are rearing their head once again, the prospect that the RBA has likely ended its tightening phase has sent AUDUSD tumbling into two-week lows. However, the increasingly concerning economic data emerging from the US and European regions do highlight a strong chance that soon enough we will see a similarly hesitant approach from other central banks.

European markets have continued the negative theme established in the Asian session, with fears over a growing Chinese crisis growing to the detriment of market sentiment. A raft of PMI surveys released throughout Europe this morning continued the concerning theme of economic deterioration, with both Spain and Italy seeing their services sector fall into contraction. Meanwhile, the downward revisions to German, French, and eurozone composite PMI surveys highlight a worsening in economic conditions over the course of August alone.

Inflationary fears are regaining traction as energy prices start to push steadily higher. While WTI crude has started to fade this morning, it comes off the back of a Friday spike that pushed the key gauge into the highest level since November 2022. This recent rise in crude has already had a tangible impact on consumer prices, with UK drivers hit by one of the biggest monthly fuel price hikes in over 20-years last month.

Looking ahead, US factory orders data will be followed closely, with markets forecasting a potential July collapse that could see the biggest contraction since the Covid related slump in mid-2020. Coming off the back of a US jobs report that saw a jump in unemployment and a 30k downside revision to the prior payrolls release, a sharp contraction in factory orders today could similarly raise concerns that the US economy is rolling over.

Share this article:

Disclaimer: This material is a marketing communication and shall not in any case be construed as an investment advice, investment recommendation or presentation of an investment strategy. The marketing communication is prepared without taking into consideration the individual investors personal circumstances, investment experience or current financial situation. Any information contained therein in regardsto past performance or future forecasts does not constitute a reliable indicator of future performance, as circumstances may change over time. Scope Markets shall not accept any responsibility for any losses of investors due to the use and the content of the abovementioned information. Please note that forex trading and trading in other leveraged products involves a significant level of risk and is not suitable for all investors.

Payment Methods

Scope Markets
Scope Markets
Scope Markets
Scope Markets


Scope Markets
Scope Markets
Scope Markets
Scope Markets

Scope Markets offers institutional and retail trading services to businesses and traders worldwide. Our top management team has more than 20 years of experience in the industry, and we are proud of the solid partnerships we built over the years. Whether it's a business or individual, Scope Markets has a wide range of trading solutions that are compliant, flexible, cost-efficient, innovative, and place the client first.

Contact Us

Registered address:
6160, Park Avenue, Buttonwood Bay, Lower Flat Office Space Front, Belize City, Belize


+44 2030 516959

Risk Warning

Please note that forex trading and trading in other leveraged products involves a significant level of risk and is not suitable for all investors. Trading in financial instruments may result in losses as well as profits and your losses can be greater than your initial invested capital. Before undertaking any such transactions, you should ensure that you fully understand the risks involved and seek independent advice if necessary. Please read and ensure you fully understand our Risk Disclosure.

Legal Information

RS Global Ltd is authorized and regulated by the Financial Services Commission of Belize ("FSC") under the Securities Industry Act 2021 with registration number 000274/2.

Restricted Regions

Scope Markets does not offer its services to the residents of certain jurisdictions. Please read carefully our Restricted Countries document.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

© Copyright 2022 Scope Markets. All Rights Reserved.