China's flash PMI reading weakens, prompting speculation of stimulus

Monday, March 24, 2014

China’s flash manufacturing PMI softened to 48.1 for March missing the median expectation of 48.7 expected by analysts’ in a Bloomberg survey marking a third consecutive month of a reading below 50. Despite the weaker than expected reading, Asian equity markets posted strong gains as speculation that Beijing would step up stimulus efforts encouraged investors into risk assets. The CSI 300 and Shanghai Composite posted steady gains, adding 0.82% and 0.91% respectively while Japanese benchmark indices rallied substantially higher as the Nikkei closed up 1.77% and the TOPIX gained 1.49%.

US investors returned to equity markets with confidence last week as encouraging economic data supported intraday moves in the S&P 500 towards record highs on Friday. Better than expected jobless claims and manufacturing data have allayed concerns that growth momentum was slowing as investors concluded that the adverse weather conditions throughout January and February were largely to blame for the sluggish performance. The renewed risk appetite in global markets saw spot gold prices retreat further this morning after a brief correction on Friday on geopolitical tensions. Prices dropped towards $1,323/oz in early morning trade as investors focused less on the impact of tapering and more on the outlook of US interest rates. 

Tensions between Russia and the Ukraine remain high as President Obama’s arrived in Europe for talks with commentators calling for more support of Ukraine’s government. With news that Russian troops were assembling on Ukraine’s eastern border pressure on Western powers to help bring stability to the region could see the imposition of further sanctions against Russia, possibly extending beyond the current individual visa bans and asset freezes to target specific economic concerns. The rouble remains under pressure, currently trading around 36.12 against the dollar while capital flight has seen the benchmark MICEX index lose over 11% since the start of the year.

Gold rose on Friday on geopolitical risk but has since resumed declines this morning

XAU Curncy Gold Spot Oz 2014 03 24 07 35 40 

Russia's MICEX trades with increasing volatility on investor retreat

INDEXCF Index MICEX Index 2014 03 24 07 47 51

RUB remains under pressure on the threat of further sanctions

RUB Curncy Russian Ruble SPOT 2014 03 24 07 45 49

 

Events for today: Monday, 24 March 2014

0200

CN

Feb

HSBC Markit Flash Mfg PMI

0830

DE

Mar

Markit Mfg & Services

0858

EZ

Mar

Markit Mfg & Services

1230

US

Feb

Chicago Fed

1430

US

Mar

Midwest Manufacturing

All times UK Local Time

 

Topics: Gold, PMI, RUB
More from: Kash Kamal