Chinese flash manufacturing PMI rises to 50.4

Thursday, October 23, 2014

China's manufacturing PMI posted a surprise increase in October, rising to 50.4 against expectations of a 50.2 reading as resilient factory output bounced back. The sanguine data builds on Monday's release of better than expected Q3 GDP and industrial production data and is a further indication of the relative success of looser policy from Beijing in an attempt to halt the slowdown in economic output. However, a fragile property market and the ongoing threat of deflationary pressures kept gains in Chinese mainland stocks to a minimum while the yuan was largely unchanged overnight. As concerns of a slowing growth target dominate investor sentiment we may continue to see downside risks with investors paying close attention to any revision to the final PMI reading which will be released on the first of November.

Front month WTI futures traded towards a two year low yesterday after EIA data indicated a larger than expected build in crude oil stocks. WTI shed 2.4% yesterday after trading under pressure for most of the session as official statistics outlined a 7.1m barrel expansion in crude stocks w/w. The significant increase was far more than the 3m w/w addition expected by market participants according to a Bloomberg poll and built on the 8m barrel increase the previous week. With such a large overhang in global crude supplies it's only a matter of time before affirmative action will be taken with talk on the major newswires hinting at s possible reduction in OPEC output. Samir Kamal, Libya's governor to the group stated that output may need to be cut by as much as 500,000 bpd in an effort to tackle the oversupply issue.

Today marks a busy session for economic data in stark contrast to the first half of the week which saw minimal releases for both the eurozone and the US. The day’s releases will kick off with eurozone flash manufacturing PMI data before moving on to UK retail sales while in the afternoon market participants will position themselves ahead of US data, notably weekly initial jobless claims, Markit manufacturing PMI and the KC Fed manufacturing activity index. Despite a positive start to the session for European equities yesterday, US markets struggled to hold on to early gains and with selling pressure carrying over to Asian trading investors will be paying close attention to economic data today.  

China's flash manufacturing PMI posts surprise increase

 MPMICNMA Index HSBC China Manuf 2014 10 23 07 26 18

WTI faces further selling pressure on rising crude inventories

CL1 Comdty Generic 1St CL Fut 2014 10 23 07 25 57

Events for today

0830

DE

Oct

Markit Mfg Flash

0900

EZ

Oct

Markit Mfg Flash

0930

UK

Sep

Retail Sales

1330

US

w/e

Jobless Claims

1330

US

Sep

National Activity Index

1400

US

Aug

Monthly Home Prices

1445

US

Oct

Markit Mfg PMI

1500

EZ

Oct

Consumer Confidence

1600

US

Oct

KC Fed

Topics: Crude oil, PMI, WTI
More from: Kash Kamal