After yesterday's surprisingly bad US existing home sales figures heightened fears of a global slowdown, news that orders for the country's manufactured goods were weaker than expected has sent new shudders through the markets.
US durable goods orders for July rose just 0.3% compared to expectations of a gain of around 2.8%. Rob Carnell of ING Bank said:
The latest durable goods orders data throw more doubt on the resilience of the US recovery, with the headline growth rate of only 0.3% helped by a whopping 75.9% gain in non-defence aircraft. Without this, and other transport items, new orders would have dropped by 3.8% mom.
Within the GDP breakdown, second quarter business investment grew at a 21.9% annualised rate following on from 20.5% in the first quarter. Expect a sharp curtailment of this growth in the third quarter, which will cost around 1 percentage point of GDP growth, and keep fears of double dip and more quantitative easing on investors minds – even lower bond yields beckon.
FTSE 100
So Wall Street futures - initially predicting an opening rise for the US market - are now down 68 points for the Dow Jones Industrial Average. The is off 61.32 points at 5094.64, while the yield on UK 10 year gilts hit yet another new low at 2.79% as investors sought a safe haven from the storm.
European shares were also lower, with the French and German markets both down around 1%. Nerves had been stretched earlier with news of the downgrading of Irish debt by Standard & Poor's, but these signs of more US weakness have added to the uncertainty. And later this afternoon come US new home sales, which could also have an impact.
