China PMI indicates slowdown despite Beijing's efforts

Monday, August 03, 2015

A weaker than expected July manufacturing PMI reading over in China prompted a retreat from Asian equities during overnight trading as investors expressed fresh concerns for policymakers who have in recent months used a variety of tools at their disposal to try and reverse China’s economic fortunes. The official manufacturing PMI reading came in at 50.0 which was both below the 50.1 expected by market participants and June’s reading of 50.2, raising doubts that Beijing’s efforts to try and stimulate growth are so far proving unsuccessful.

Both the Shanghai Composite and CSI 300 spent the majority of the session under pressure with wider equity indices across the region following mainland Chinese stocks lower. The jittery outlook was somewhat confirmed early this morning with the release of the final reading for the Caixin manufacturing PMI reading for July, which fell further than previously thought slipping from 49.4 in June to 47.8 in July after being revised down from 48.2.   

Greek financial markets have reopened today after remaining closed for five weeks as creditors concluded the process of negotiating a third bailout for the indebted nation. Trading restrictions were broadly expected for local traders, who will only be able to trade stocks, bonds, derivatives and warrants under certain conditions. No such limits or controls will be placed on international investors as long as they were active in the markets before the shutdown which started in June. Talks on Friday between officials from the IMF, the European Stability Mechanism, the ECB and the European Commission were largely positive and went some way to placate market participants who were otherwise worried that the necessary overhauls of Greek labour, pension and financial markets would not be implemented.

After rallying towards 1.1114 on Friday as intraday moves breached both the 50 and 100  day moving averages, intraday gains failed to take root at these levels and we saw the single currency give back these gains against the dollar and return to familiar territory. The euro has started the week cautiously trading once again just below 1.1000 against the dollar as investors closely monitor the reopening of the Athens Stock Exchange.  

China's official manufacturing PMI drops to 50.0

CPMINDX Index China Manufacturi 2015 08 03 07 58 00

EUR trades under 1.1000 against dollar

EUR Curncy Euro Spot Daily 03 2015 08 03 08 23 51

Events for today

0245

CN

Jul

Manufacturing PMI (01/08/15)

0245

CN

Jul

Non-Manufacturing PMI (01/08/15)

0230

JP

Jul

Manufacturing PMI

0855

DE

Jul

Markit Manufacturing PMI

0900

EZ

Jul

Markit Manufacturing PMI

0930

UK

Jul

Markit Manufacturing PMI

1330

US

Jun

PCE & Personal Income

1445

US

Jul

Markit Manufacturing PMI

1500

US

Jul

ISM Manufacturing

1500

US

Jun

Construction Spending

Topics: China, ECB, PMI, EUR
More from: Kash Kamal