US factory activity hits 2-year low sparking economic slowdown worries
US manufacturing activity slowed to a 24-month-low in December, revealing concerns over a slowing economy
Data released on Thursday from The Institute for Supply Management (ISM) has revealed US manufacturing sectors declined last month.
The report revealed its index of national factory activity fell 5.2 points to 54.1 in December, marking the lowest reading since 2016.
IG market analyst, Kyle Roda says the ISM data showed lower than expected results.
‘It added fuel to the notion that a cyclical economic slowdown in both the US and China, exacerbated by those two countries’ trade-war, is upon us.’ Mr Rodda said.
The ISM’s new orders sub-index dropped 11 points to 51.1 in December marking its lowest since August 2016, with the factory employment measure plunging to 56.2 in December, down from 58.4 in November.
The report revealed that ongoing issues with tariffs between US and China had caused long-term concern for machinery makers, with cost and sourcing strategies being questioned.
US Stocks fall upon data
US stocks and US treasury yields fell upon the weak ISM survey affecting the Dow Jones Industrial Average, touching a 600-point drop on Thursday.
Oil prices drop on economic concerns
US oil prices fell on Friday, with WTI crude futures down 27 cents at $46.82 per barrel at time of writing.
Analysts say oil prices are expected to see some support as OPEC supply cuts start to kick in. IG market analyst, Kyle Rodda says the economic data has driven traders from equities into safe havens.
‘Both European and US stocks were down, gold has burst higher to $US1293, the Yen has climbed across the board. Most significantly, US Treasuries have rallied, bending the yield curve into a very ugly shape, as traders price in the prospect of Fed rate cuts in 2019.’ Mr Rodda said.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Live prices on most popular markets
- Forex
- Shares
- Indices
