Selling DAX30 and Other Stocks, As US Services Fall in Contraction Too

Posted Friday, July 22, 2022 by
Skerdian Meta • 2 min read

The global economic situation is getting from bad to worse, as almost all indicators show. Prices keep increasing as the CPI (consumer price index) inflation shows, while the increase in the PPI (producer price index) will keep producer prices higher as well in the coming months. This has hurt consumer and investor confidence, and most sectors have fallen or are heading into a recession.

Earlier today we saw the Eurozone manufacturing fall in contraction and services will most likely head there next month. A while ago we saw the US services PMI indicator fall to 47 points for this month, so the global economy is almost there.

US July Services Report

Composite SPX global

  • US July flash services PMI 47.0 points vs 52.6 expected
  • June services PMI was 52.7 points
  • Manufacturing PMI 52.3 points vs 52.0 expected
  • Prior manufacturing was 52.7 points
  • Composite 47.5 points vs 52.3 prior

Most global PMIs have been on the soft side in today’s slate but this is particularly bad. We’d seen some poor manufacturing PMIs so that’s where you would expect the weakness to be concentrated but the services PMI is dreadful, it fell off a cliff.


  • Services below 50 for the first time since June 2020
  • Manufacturing new orders at the lowest since May 2020
  • Services sector prices charged index falls to lowest since Mach 2021
  • Composite new orders returned to expansionary following June contraction
  • Composite input costs was softest in six months
  • Composite business confidence slipped to lowest since Sept 2020

This is the kind of thing that will give the Fed pause regarding hiking above 3%. The odds of 100 bps fell to pretty much nil from 10% before the data. The Dec contract is now the high at 3.28% from 3.38% earlier. The US dollar is falling fast today with a huge bid in bonds.

DAX30 Daily Chart – The 50 SMA Providing Resistance

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:

“The preliminary PMI data for July point to a worrying deterioration in the economy. Excluding pandemic lockdown months, output is falling at a rate not seen since 2009 amid the global financial crisis, with the survey data indicative of GDP falling at an annualised rate of approximately 1%. Manufacturing has stalled and the service sector’s rebound from the pandemic has gone into reverse, as the tailwind of pent-up demand has been overcome by the rising cost of living, higher interest rates and growing gloom about the economic outlook.

“An increased rate of order book deterioration, with backlogs of work dropping sharply in July, reflects an excess of operating capacity relative to demand growth and points to output across both manufacturing and services being cut back further in coming months unless demand revives. However, with companies’ expectations of future growth slumping to the lowest since the early days of the pandemic, any such revival is not being anticipated. Instead, firms are already reassessing their production and workforce needs, resulting in slower employment growth.

“Although supply constraints remained problematic, constraining economic activity, the weakening demand environment has helped to alleviate inflationary pressures. Average prices charged for goods and services consequently rose at a much reduced rate in July, the rate of inflation still running high by historical standards but now down to a 16-month low to provide some much needed good news amid the ongoing cost of living crisis.”

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