China’s Growth Slows; Scotland’s Independence Vote, Fed Meeting Weighs on Market

Stock-MarketSlower than expected growth in China along with caution ahead of Scotland’s independence vote and the Federal Reserve’s two day meeting have investors on edge on Monday.

China’s economy was in the spotlight over the week-end after data from China’s Bureau of Statistics showed that Chinese industrial production growth in August slowed to its lowest level since December 2008, raising concerns about whether China can reach its annual GDP growth target of 7.5 percent as debate widens about the need for aggressive monetary stimulus to boost economic growth in the world’s second largest economy.

Industrial output grew 6.9 percent in August, missing consensus estimates, and falling well below 9.0 percent in July.

On Wednesday the Federal Reserve will conclude their 2 day FOMC meeting and issue a statement that will be followed by a press conference with Fed Chair Janet Yellen.

Investors will pay close attention to the style of language contained in the released statement along with Fed Chair Janet Yellen’s speech that broaches the topic of interest rates.

Short-term interest rates have been kept near zero since December 2008 during the depths of the recession to help spur lending, refinancing, and economic activity.

Aside from the disappointing U.S. jobs report for August that showed just 142,000 non-farm payroll jobs added to the economy, the overall U.S. economy and labor market has strengthened and many economists are questioning whether the Federal Reserve should keep holding short-term rates low instead of hiking rates and return to a period of normalization.

It is expected that the Federal Reserve will hike rates in 2015, either in the spring or summer.

The Fed’s quantitative easing program (QE), another form of monetary stimulus that has assisted the housing recovery and boosted stock markets, will end next month.

On Thursday Scottish voters will decide about achieving independence and separating from England.

If Scottish voters in favor of separating on their independence referendum, the outcome could inspire more secession movements across Europe, especially in areas such as Spain.

Nearly £17 billion has already been pulled out of Britain’s economy during the last month because of concerns about Scotland’s independence vote.

On Friday morning Wall Street’s biggest IPO is expected to occur with Alibaba, a Chinese e-commerce company.

Alibaba shares will be priced in the $60-66 range on the New York Stock Exchange but final pricing will be decided Thursday night.

Alibaba will sell 123 million new shares of the total 320 million shares. Yahoo has a 23 percent stake in Alibaba.

-Johnathan Schweitzer

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