China and Emerging Markets

The financial sector collapsed last night as a worst than expected home sales figure snapped the market out of its trance. The Dow fell 283.

The Chinese economy is slowing but economists continue to expect a soft landing and a shift in focus away from inflation towards supporting growth.

The Dow closed down 128 having been down 250 on rumours surrounding the US mortgage lenders and Israeli jet fighters.

The Dow rose 81 points in other volatile session as oil spiked suddenly and financials stared death in the face.

It was a wild night on Wall Street as investors traded off a lower oil price against more financial sector weakness. The Dow closed down 56 points.

CLSA’s June survey into Chinese manufacturing confirms Chinese manufacturers continue battling with higher input costs.

The price of petrol will be 17% higher in China tomorrow, prompting a US$5 fall in the oil price last night. But the Dow managed only a 34 point rally.

The Dow finished as good as unchanged as inflation talk took the US dollar up, oil down some more and gold down a lot.

If the Aussie is really heading to parity, get ready for some significant profit downgrades from exporters and companies deriving a large percentage of profits in the US.

Soaring oil and subsequently rising inflation finally took its toll on Wall Street last night. The Dow fell 200 points.