LONDON — The clear signal from the U.S. Federal Reserve that it will soon stop pumping money into the global economy and data pointing to Chinese growth slowing sparked sharp falls in bonds, shares and commodities on Thursday.
Emerging markets, many of which have been primed by the cheap Fed cash, saw some of the biggest selling as investors rushed to the exits.
Different markets sending different signals. That's the gist of BofA Merrill Lynch rates guru David Woo's latest report – titled "The impossible trinity: A tale of three cities" – which begins like this (emphasis added):
Hong Kong (AFP) - Asian equity markets mostly rallied Thursday on strong US data and expectations for fresh eurozone stimulus measures, while oil prices gave up early gains to resume their downward trend after a surge in New York.
The HSBC China Flash PMI tumbled to an eight-month low of 48.1 from 48.5 in February. Economists were looking for the index to climb to 48.7. And any reading below 50 signals contraction. Interestingly, markets have held up in the wake of the news. China's Shanghai Composite climbed 0.9% and Hong Kong's Hang Send jumped 1.9%.