Slowdown Weighing On Global Equities

Global markets are under pressure this morning following a wave of recent data in the past few days that confirm the global economy has been cooling. U.S. futures are mostly flat with a push to the downside following 5 consecutive weeks of gains.

On Monday latest data out of Japan showed Japan’s economy grew at an annualized 1.4% in 2nd quarter, lower than an expected 2.7% predicted by economists and a serious decline from a revised 5.5% expansion in the prior quarter.

Last Friday China posted disappointing trade figures. On Thursday it became known that Chinese industrial production grew 9.2 percent in July, the weakest level in more than three years. Chinese 2Q GDP grew 7.6% yoy, the slowest pace since 1Q 2009. Bank of America Merrill Lynch on Monday cut its 2012 growth estimate for China to 7.7% from 8%.

Yields on the 10 yr. Spanish and Italian bonds have moved higher. The Spanish 10 yr. bond is just under 7% which is seen as a risky level.

Greece posted -6.2% 2Q GDP which is slightly better than -6.5% in 1Q. However, Greece’s unemployment level rose to 23.1% with 55% unemployment for Greeks in the 15-24 year old range.

Tomorrow German GDP for the second quarter is expected to show modest growth of about 0.2% as a global slowdown takes its toll on a German economy that is heavily dependent on exports. German Economics Minister Phillip Rosler said the outlook for global recovery remains fragile while there is  no further talks about the next step for the ECB.



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