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Investing Specialists

Slowing China Will Test Emerging Markets

My thesis that a modestly slowing China is good news for the U.S. economy is going to be tested sooner rather than later.

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All of the market-moving news this week seemed to come from outside the United States.

The bulk of the news dealt with slowing growth in China. For those who didn't believe the Chinese government a couple of weeks ago when they reined in their growth prospects (to a mere 7.5%), this week's news more or less confirmed those warnings. The week started with news that Australian miners were reporting a weakening of orders from China. Then later in the week the most recent set of purchasing managers' reports out of China showed another small decline. Then, to top off the week, some shippers noted a slowing in demand because of softening international trade and a general move toward cheaper but slower shipping alternatives.  FedEx (FDX)  even announced that it planned to send a few of its jets to the desert for storage to realign supply and demand.

Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.