More clouds on the growth horizon

Concerns over the ongoing economic slowdown are growing among financial markets. In the US, the Nasdaq index plunged on Friday by more than 4% on the back of concerns about rising interest rates and softer business updates from tech giants (notably Amazon). It finally recorded its sharpest monthly drop since October 2008 in April. China’s pledge to stabilize the economy and urge greater efforts to meet economic growth targets provided some support to European equity markets overall on Friday. But the EUR USD rate remains close to a five-year low due to diverging monetary policies in the US and in Europe as well as a traditional strengthening of the dollar in times of uncertainty.

On the agenda today, the release of manufacturing PMIs in the Euro Zone and the US will be closely watched. Both non-manufacturing and manufacturing PMIs plunged in China in April, well below the 50-point mark separating growth from contraction (see chart), highlighting once again the massive impact of the zero-covid strategy on the Chinese economy. The Chinese Renminbi is trading at its lowest level against the USD since November 2020.