Growth Concerns Stalk Traders into the New Year

It might be a new year, but the concerns are anything but new. The growth fears that weighed on sentiment across the second half of 2018 and most notable in December wasted no time is rearing their head once again in 2019.

Weak manufacturing data from China sent jitters once again through the markets. Data showed that the Chinese manufacturing sector contracted in December as the PMI fell below 50. China’s huge manufacturing sector contracting for the first time in 19 months and European manufacturing also showing weakness are further signs of the US – Sino trade war is taking its toll on global manufacturing. The data is fueling fears of a global economic slowdown and is giving investors little reason for optimism as the new year begins.

Later today US manufacturing data is expected to show that the US manufacturing sector slowed but is still expanding with the PMI forecast to be 53.9 in December.

As concerns over the global economy continue to haunt investors the mood is risk off. US futures following the trend across Asia and Europe US markets are pointing to a lower start after the bell on Wednesday, whilst flows into safe havens such as the Japanese yen and gold are on the increase.

Gold Shines

Gold has scaled to a 6 month high in early trade hitting $1287. With concerns over the health of the global economy growing, traders are pricing out any further rate hikes from the Fed dragging the dollar lower and boosting the appeal of non- interest-bearing bullion. The softer dollar combined with risk off sentiment and desires to avoid the wild swings in the stock markets is making gold an extremely attractive option. As the overall mood in the market remains uncertain the outlook for gold remains solid.

Gold is up some 10% since August, climbing over $50 dollar over the past month. The price could talk experience some resistance around $1300. Traders will now look towards Friday’s non-farm payroll data for further clues over the health of the US economy and the chances of a rate hike from the Fed this year. A weak reading could see the yellow metal get fresh legs on this rally.

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