Bitcoin hits new monthly low as manufacturing data drags down market

Author: Revc, Golden Finance

Foreword

U.S. stocks suffered a heavy blow yesterday, with the Dow Jones Index, S&P 500 Index and Nasdaq Index all falling sharply, with the Nasdaq falling the most since August 5. The crypto market was also dragged down by the stock market, with nearly $200 million liquidated across the network. Golden Finance sorted out the relevant factors of the market crash to help investors understand market dynamics in a timely manner.

Manufacturing dataintensified outside concerns about the direction of the economy

The August manufacturing purchasing managers' index (PMI) released by the Institute for Supply Management (ISM) was 47.2, lower than market expectations, and below the 50 boom-bust line for the fifth consecutive month, only briefly rising above 50.3 in March this year. PMI is an important indicator for measuring the prosperity of the manufacturing industry. Its continued decline indicates that the US manufacturing activities are still in a state of contraction and economic growth is facing pressure.

The survey of the Institute for Supply Management (ISM) in the United States shows that although the US manufacturing activities are still in a state of contraction in August, the contraction rate has slowed down compared with the previous month. Timothy Fiore, chairman of the ISM Manufacturing Business Survey Committee, said that despite this, the demand for manufacturing is still weak, the output continues to decline, and due to the monetary policy of the Federal Reserve and the uncertainty of the US election, companies are cautious about investment and increasing inventory. However, Fiore also pointed out that the current PMI index is below 50, but still above 42.5, indicating that the overall economy is still expected to maintain expansion.

After the release of the ISM manufacturing PMI data, the three major US stock indexes fell, among which the Nasdaq index fell the most significantly, by more than 2.5%. In addition, the manufacturing sub-index also conveyed new signals that the job market may continue to be strong, which is in line with the expectations of the non-farm payrolls report to be released this week.

The market's expectations for the Fed's interest rate cut are still cautious

According to the latest economic data, the US GDP growth rate in the second quarter was raised to 3.0%, higher than the previous expectations and the growth rate in the first quarter. At the same time, the number of initial jobless claims fell by 2,000 after seasonal adjustment, indicating that the labor market situation has improved. However, despite the good performance of economic data, the market's expectations for the Fed's interest rate cut are still cautious. Although some economists believe that the current data supports a 25 basis point interest rate cut, the market's expectations for a 50 basis point interest rate cut have declined. In addition, the US dollar index rose slightly after the release of the economic data, indicating that the market still has some concerns about the economic outlook.

The interest rate hike by the Bank of Japan is also a factor that cannot be ignored

The governor of the Bank of Japan recently reiterated his position of continuing to raise interest rates, believing that the current economic environment is still relatively loose. At the same time, the head of fixed income at T. Rowe Price warned that the Fed's possible interest rate cuts and the Bank of Japan's further tightening policy may lead to market turmoil again, and the market crisis in August may be just a harbinger.

Summary

Market volatility has increased recently, and the VIX panic index has soared by nearly 40%. Market data and analysis may cause confusion in investors' direction, while the weakness of the ISM manufacturing PMI has exacerbated market concerns about the outlook for the US economy, and both US stocks and crypto markets have fallen. Investors should pay close attention to the direction of the Fed's monetary policy and changes in the global economic situation.