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No hiding place from China’s malaise

Certainly, investors have plenty to think about going into September, and with the Fed’s next FOMC meeting in just two weeks’ time, it’s understandable why you may think it best to “keep some power dry” rather than jumping into perceived opportunities in these and other sectors. 

After all, from 23-28 August, the Dow Jones Industrial Average moved up and down by an incredible 5,612 points. 

As I write today, it is another sector – mining – that has been the hardest hit on the FTSE. For Chris Beauchamp, senior market analyst at IG, UK manufacturers are feeling the impact of weaker Chinese demand for goods, a sign that there is no part of the world that can escape China’s malaise.

Beauchamp suggests that, with the IMF once again warning on global growth, it appears even the cheaper valuations on offer last week are not enough to tempt people back into risk assets.

“The problem for stocks at the moment is that no central bank, a key driver of risk appetite in recent years, appears to be willing to ride to the rescue of embattled investors,” he says. 

“Oil prices have spent the day trimming gains following yesterday’s jump, as markets realised that there was little of substance behind suggestions that fresh talks among key suppliers were likely. 

“Overall, it looks like the volatility of August is likely to remain with us into September.”

Part of the Bonhill Group.