Comment: China’s PMI Rises, Sterling Hits 7 Year High Against the Dollar
July 1, 2014 7:08 am
Equity markets in Europe started the second half of this year on a brighter note, following improving manufacturing data from China which lifted Asian markets overnight. Despite a flat end to US trading in the previous session, the S&P 500 gained 4.7% in the quarter overall (its largest quarterly gain since 1998) on the strength of better housing market data.
US stock futures were higher Tuesday morning with Standard & Poor’s 500 Index up 0.2% while the MSCI Asia Pacific Index rose 0.3% to extend a six-year high. That’s due to the optimistic picture painted by two manufacturing reports out of China – the country’s official manufacturing PMIs rose to 51 in June versus May’s reading of 50.8, while the final reading of PMIs complied by both HSBC and Markit Economics rose to 50.7 in June from 49.4 in May; both indicators are now above the 50 mark which signals expansion. The rebound seen in manufacturing is welcome news following turbulence in the Chinese economy over the past year, with market participants previously unsure if the Chinese government had done enough to steer the economy in the right direction. It now seems as if the government’s stimulus measures are beginning to take effect.
The better Chinese data pushed European markets this morning; the UK’s FTSE100 index was up 0.4% while the DAX in Germany added 0.3% and the Stoxx Europe 600 Index gained 0.3% – the index is up 4.1% for the year. Manufacturing PMI figures out of the Eurozone today were mixed – France reported a reading of 48.2 for June which was better than the 47.8 initial read, but worse than the 49.6 recorded in May. In Italy, PMIs slipped to lowest level in three months at 52.6 in June, down from 53.2 in May, although still in expansion territory above that 50 figure. Encouragingly, Spanish manufacturing activity hit a seven-year high, up to 54.6 in June from 52.9 in May, indicating the recovery there has taken hold. Germany saw slight easing in PMIs, in at 52 in June down from 52.4 in May, in line with the moderation in recent German data such as the fall in retail sales on Monday. As a whole, the Eurozone figure came in 51.8, only slightly down from May’s 51.9.
Overnight in Asia, stock markets rose with the regional indices heading for a six-year high. Japan’s Nikkei 225 rose more than 1.1% after the Bank of Japan’s Tankan survey showed companies raised investment plans even as a sales-tax increase dented sentiment. Hong Kong’s market was closed for a public holiday while the Shanghai Composite was largely flat, but the Australian stock index fell 0.4% after the central bank there kept policies unchanged.
In currency markets, the UK pound remain elevated after reaching a seven-year high of $1.7115 during the US session. The pound is currently at $1.7100 while the euro is down 0.1% at $1.3681. The Japanese yen fell 0.1% against the US dollar while the USD on the whole appeared to be steady. Elsewhere, Brent crude is creeping higher again, currently up 0.2% at $112.52, as worries about supply disruption continue due to continued violence in Iraq.
Equity markets in Europe started the second half of this year on a brighter note, following improving manufacturing data from China which lifted Asian markets overnight. Despite a flat end to US trading in the previous session, the S&P 500 gained 4.7% in the quarter overall (its largest quarterly gain since 1998) on the strength of better housing market data.
US stock futures were higher Tuesday morning with Standard & Poor’s 500 Index up 0.2% while the MSCI Asia Pacific Index rose 0.3% to extend a six-year high. That’s due to the optimistic picture painted by two manufacturing reports out of China – the country’s official manufacturing PMIs rose to 51 in June versus May’s reading of 50.8, while the final reading of PMIs complied by both HSBC and Markit Economics rose to 50.7 in June from 49.4 in May; both indicators are now above the 50 mark which signals expansion. The rebound seen in manufacturing is welcome news following turbulence in the Chinese economy over the past year, with market participants previously unsure if the Chinese government had done enough to steer the economy in the right direction. It now seems as if the government’s stimulus measures are beginning to take effect.
The better Chinese data pushed European markets this morning; the UK’s FTSE100 index was up 0.4% while the DAX in Germany added 0.3% and the Stoxx Europe 600 Index gained 0.3% – the index is up 4.1% for the year. Manufacturing PMI figures out of the Eurozone today were mixed – France reported a reading of 48.2 for June which was better than the 47.8 initial read, but worse than the 49.6 recorded in May. In Italy, PMIs slipped to lowest level in three months at 52.6 in June, down from 53.2 in May, although still in expansion territory above that 50 figure. Encouragingly, Spanish manufacturing activity hit a seven-year high, up to 54.6 in June from 52.9 in May, indicating the recovery there has taken hold. Germany saw slight easing in PMIs, in at 52 in June down from 52.4 in May, in line with the moderation in recent German data such as the fall in retail sales on Monday. As a whole, the Eurozone figure came in 51.8, only slightly down from May’s 51.9.
Overnight in Asia, stock markets rose with the regional indices heading for a six-year high. Japan’s Nikkei 225 rose more than 1.1% after the Bank of Japan’s Tankan survey showed companies raised investment plans even as a sales-tax increase dented sentiment. Hong Kong’s market was closed for a public holiday while the Shanghai Composite was largely flat, but the Australian stock index fell 0.4% after the central bank there kept policies unchanged.
In currency markets, the UK pound remain elevated after reaching a seven-year high of $1.7115 during the US session. The pound is currently at $1.7100 while the euro is down 0.1% at $1.3681. The Japanese yen fell 0.1% against the US dollar while the USD on the whole appeared to be steady. Elsewhere, Brent crude is creeping higher again, currently up 0.2% at $112.52, as worries about supply disruption continue due to continued violence in Iraq.
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