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Another Bad Day for Asian Markets on Monday

It was another bad day for Asian markets as bad data caused markets to sell off on Monday–some severe.

The China HSBC/Markit Purchasing Managers’ Index came in at 49.2 indicating that Chinese manufacturing demand is slowing. Any reading below is 50 is considered contraction.

The official Chinese May PMI number 50.8 but that includes large and state-owned company which some see as skewing the results.

According to CNBC, this reinforces the view that the Chinese economy is slowing. The IMF lowered its growth forecast to 7.75 percent while the Chinese government set a target of 7.5 percent.

This news was enough to drive Asian markets lower on Monday. The Nikkei lost another 3.7 percent after opening two percent lower. Chinese data weighed on the index but continued fears that the U.S. will scale back its bond buying program as well as technical selling continued to force the index lower.

Other fears emerged. As the Japanese market continues on its downward trajectory, investors are beginning to worry that Japanese Prime Minister Shinzo Abe’s QE program may not be sustainable over the longer term.

QE isn’t new for Japan. The country tried it on a smaller scale in 2006 and although it was beneficial in the short-term, when the program ended, the economy, once again, fell into deflation.

U.S. markets look to start the day higher but after Friday’s slide, investors won’t look at U.S. futures data and make bullish bets. They will closely watch the decline in Asian markets on Friday.

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