China's PMI hits 50.2 in May, sends risk assets higher

Monday, June 01, 2015

China’s manufacturing PMI reading for May rose to 50.2, sending risk assets higher as investor confidence steadily improved. After a shaky start to the year, which saw the PMI reading slip below the 50 point mark that separates expansion from contraction in January and February, it seems the supportive measures instigated by policymakers in Beijing are slowly starting to have the desired effect. Mainland Chinese equity benchmark indices rallied substantially on the data with the CSI 300 gaining 4.6% overnight while the Shanghai Composite added 4.3% throughout the trading session.

Three month LME copper, aluminium and nickel prices were supported higher early on this morning on the stable Chinese PMI data, as the industrial metals attempted to recover some of Friday’s steep losses. The combination of looser fiscal constraints and significant monetary easing have in recent months started to turn the tide and an increasing majority of investors are hopeful that the once deteriorating economic outlook which dominated much of 2014 has finally passed. Trade data expected next week will either confirm or deny whether Beijing’s efforts have proved successful.

The deadline for a Greek deal is fast approaching and it seems hope is quickly fading as talks over the weekend failed to garner any significant traction. The stalemate regarding budget targets and structural reforms has seen eurozone markets trade with increased volatility over the past few weeks with the euro in particular experiencing choppy trading activity, having rallied towards 1.1500 during mid-May before slipping back towards 1.0820 toward the end of the month. Currently the single currency is trading around 1.0950 against the dollar, pinned down by firm resistance around 1.1000 and we could see the coming week ape recent trading activity as investors pay close attention to any potential agreement between Greece and its creditors.

China's May manufacturing PMI reading improves to 50.2

CPMINDX Index China Manufacturi 2015 06 01 07 25 35

EUR continues to experience choppy trade against USD

EUR Curncy Euro Spot 2015 06 01 07 59 58

Events for today

0245

CN

May

Manufacturing PMI

0245

CN

May

Non-Manufacturing PMI

0245

CN

May

HSBC Manufacturing PMI

0855

DE

May

Markit Mfg PMI

0900

EZ

May

Markit Mfg PMI

0930

UK

May

Markit CIPS Mfg

1300

DE

May

CPI

1330

US

Apr

PCE & Personal Income

1445

US

Apr

Markit Mfg PMI

1500

US

May

ISM Manufacturing

1500

US

Apr

Construction Spending

Topics: Copper, Aluminium, PMI, EUR, LME, Greece
More from: Kash Kamal