Bernanke was being dovish: StanChart's Sarah Hewin

In an interview to CNBC-TV18, Sarah Hewin of Standard Chartered said that the European markets is bound to react to the weak Chinese PMI (Purchasing Manager's Index) data, other Asian markets as well as US Market. The US markets fell in what Hewin says was a misreading of Bernanke's statement. "Looking at his remarks in detail, his statement was relatively dovish."

She added that Europe is looking at better news from Germany's ISO data which might reduce some nervousness.

Also read: Fundamentals of European countries improving: StanChart

Below is the edited transcript of her interview with CNBC-TV18

Q: What is the mood like in the European markets right now?

A: We have had a lot of focus on Bernanke's speech yesterday and his comments that markets have taken to suggest could mean the Fed starts to rein in Quantitative Easing (QE) over the coming months. Looking at his remarks in detail, his statement was relatively dovish.

It was just responding to a question during his testimony that he outlined that if the circumstances required there could be some early tapering of QE and thus have an impact globally on markets including in Europe.

Q: Do you think the market is getting nervous about the kind of Fed minutes that came in yesterday's trade? The European markets did not get a chance to react to those and we saw a quite a bit of collapse in US markets in intra day trade from day's high levels.

A: European markets will be taking their cues from the US and Asian markets. In addition, we have had the factory activity in China also shrinking according to the unofficial Purchasing Managers' Indexes (PMI). On Thursday, we have got the flash PMI for the euro area. All of these factors together suggest that markets are going to be nervous.

In the PMIs of France so far, we have not really seen any particular improvement. We have seen a bit of a pick up on the manufacturing side. But for Germany we are looking for slightly better news, so that might temper some of the nervousness in European markets today.

Q: Are you sensing any panic in the European investors? Have you heard people given all the uncertainty about liquidity continuing, that perhaps they would look to exit or sell off any kind of risk assets?

A: I am not sure that we are necessarily at that stage. As always with the Fed minutes and Bernanke speech there is a lot of picking through the details and the testimony that Bernanke gave to Congress really reiterated his position previously.

In any sense, it is difficult to characterize it as having been hawkish. Our view is that the Fed will be pragmatic. I think that is what Bernanke was outlining that the Fed minutes outline as well as that the policy response will be pragmatic and will look into the data.

We have seen some improvement in the US data, but frankly last week the manufacturing surveys were pretty poor. So it is very much steady as she goes on the US economy.

Coming back to your question about investors, I think that investors will be taking into account all of the evidence that they have including Thursday’s survey data, Friday’s ISO data in Germany and Thursday afternoon’s US numbers, jobless claims in particular.