If China had hoped it would root out intervention by eliminating Citadel's rigging algos, and unleash a buying spree it was wrong: the Shanghai Composite opened negative, and never managed to cross into the green, despite the usual last hour push higher, ending down -1.1% and down for 6 of the past 7 days.
Worse, the high-beta Chinext tumbled 8% from Friday's late day highs upon opening. Surprisingly, this happened even as China's final Caixin/Markit manufacturing PMI tumbled to 47.8, the lowest since July 2013 as reported previously, a collapse which normally would have been very bullish for stocks as it guarantees even more PBOC intervention. The trouble is that with the PBOC losing the market's faith, not to mention control, bad economic news are becoming even worse news for stocks.
Adding commodity insult to stock injury, earlier today copper plunged to a fresh 6 year low, and like crude, is back in its second bear market of the past year.
#Commodities Watch: #Copper Heads into Bear Market after Metal Hits 6-Year Low http://t.co/zNhsG5Q8Yi via @business pic.twitter.com/RnnWDGT0v2
— Javier Blas (@JavierBlas2) August 3, 2015
Elsewhere in Asia equities fell with Chinese bourses at the forefront in the wake of disappointing Chinese Official and Caixin Mfg PMI readings. Hang Seng (-0.9%) traded in negative territory as the poor data increased concerns over China's growth with a PBoC official adding that downward economic pressures are ‘not small' and further revealing China had fabricated its local government debt numbers. Nikkei 225 (-0.4%) and ASX 200 (-0.4%) fell, as mining and energy names felt the effects of weak commodity prices. JGBs were flat having initially opening higher following the gains seen in USTs, however later pared gains amid a mild bounce back in Japanese equities.
The real action, however, was not in Asia but in Europe, and specifically Greece, where the stock market finally reopened after a 1+ month “capital control” hiatus. Granted, numerous conditions still remained, such as no short selling, and extensive limitations to just what could be sold, but despite the attempt to micro manage the reopening, the result was not pretty, with stocks crashing 23% at the open and staging barely a rebound trading -17% as of this moment, even as banks promptly traded down to the -30% limit as the realization that an equity-eviscerating recapitalization (or bail-in) is now inevitable.
Worse, just as the Greek stock market reopened, the Greek Markit data and at 30.2, down from 46.9 the month before, the best reaction anyone could muster to this complete shutdown in the Greek economy was laughter. The chart below hardly needs commentary…
… but here is some anyway from Phil Smith, Economist at Markit:
“Manufacturing output collapsed in July as the debt crisis came to a head. Factories faced a record drop in new orders and were often unable to acquire the inputs they needed, particularly from abroad, as bank closures and capital restrictions badly hampered normal business activity.
“Demand was hit amid the heightened uncertainty surrounding Greece's future, leading both total new business and exports to contract sharply, and it remains to be seen how long it takes these to recover.”
“Although manufacturing represents only a small proportion of Greece's total productive output, the sheer magnitude of the downturn sends a worrying signal for the health of the economy as a whole.”
Don't expect a quick rebound: Greek economic sentiment likewise tumbled, however it could be worse: unlike the unprecedented collapse in the PMI, this was only at a 3 year low:
