“September. This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, October, April, November, May, March, June, December, August, and February.”     Mark Twain.

Global markets started the autumn session with large declines as mixed data did little to assuage fears that the past 3 months of optimism were likely to come to an end very quickly. Haven flows were exaggerated as investors looking for safety jumped into USD, JPY and CHF and out of GBP, EUR and NZD.

As I said data was mixed yesterday. UK PMI for the manufacturing sector surprised to the downside after showing an amount of expansion last month. The release printed at 49.7, a move back into contractionary territory, and in turn may lead to increased and protracted caution from the Bank of England. Those who said that the worst was over may be forced to eat some humble pie soon.

US data was not able to stem this movement from risk even given a surprise jump in ISM and markedly better pending home sales numbers. US ISM manufacturing moved to 52.9 and with it the first time the measure had shown expansion since 2008 while pending home sales rose by 3.2%, the 6^th consecutive  month of positive growth.

Overnight the Asian equity markets have pulled back a little bit of ground from yesterday’s falls with the Shanghai Composite 0.76% higher at the time of writing. Markets will have also been helped by Australian GDP which showed a 0.6% expansion in Q2 against a 0.2% estimate; this will also help solidify thoughts of an Australian interest rate hike by year end after their dovish comments on Tuesday. We would expect a definite hike by November, if not done in October.

The first week of the month is always a busy one for data watchers and this Wednesday we have PMI from the UK construction industry (09.30), EU GDP (10.00), ADP Employment Change (13.15) and the minutes from the latest Fed meeting (19.00). With all this to be aware of we expect yet another volatile day with the emphasis on further falls for risky assets.