Market update: Political crises, weak Chinese data trigger sell-off – 03.07.2013

Source: Henderson Global Investors

Wall Street ended mildly lower yesterday in light trading (S&P 500 -0.1%; Dow Jones -0.3%), as investors tweaked their positions ahead of the US Independence Day holiday and in nervous anticipation of Friday’s non-farm payrolls report. At the sector level, energy stocks outperformed as light crude oil prices jumped above US$100 for the first time since September last year. Egypt's President Mohamed Morsi has rejected an army ultimatum to strike a deal with the opposition, triggering fears that the crisis may hurt oil supply through the Suez Canal. In US macroeconomic news, factory orders and car sales data came in above expectations; orders placed in US factories rose 2.1% in May, boosted by demand for commercial aircraft and bookings for durable goods. Demand for trucks helped auto industry sales climb 9% in June, and register the strongest annual sales pace since late 2007. 

A number of events have conspired to trigger a sell-off in European markets this morning (FTSE 100 -1.6%; FTSE Eurofirst 300 -1.1%). Aside from the tense political situation in Egypt, the European crisis is simmering again following the resignation of two Portuguese government ministers in two days over austerity policies, and a stand-off between Greece and its lenders over the next tranche of bailout monies. News overnight that China’s official services purchasing manager’s index had fallen to a nine-month low in June has reignited global growth fears, compounding the market sell-down.