Manufacturing Activity In China Disappoints Markets Again

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During the opening of the first week of the month, Asian markets showed mixed trading directions with Shanghai SE Composite and Hang Seng in red while Nikkei 225 and TSEC 50 Index finishing the day on a positive note.

Asian hours

The major development impacting the Asian trade came from China, where the manufacturing purchasing managers’ index (PMI) slipped further to 49.4 in January from 49.7 in December. The reading came below the estimates of 49.6, reconfirming fears that the world’s second-largest economy is under more than expected pressure.

Services PMI too fell to 53.5 for the month, brushing off expectations that consumption would become the driving factor of the economy. Meanwhile, another private survey, Caixin/Markit China Manufacturing PMI noted that the factory activity contracted for the 11th month in a row. The report triggered a fall in Shanghai SE Composite Index by 1.80% to 2,688.85. Hang Seng also shed 87.61 points or 0.45% to 19,595.50. However, both Nikkei 225 and TSEC 50 rose by 2% and 0.14% respectively today. Mumbai Sensex was marginally down ahead of the Reserve Bank of India’s monetary policy meet tomorrow.

Oil tanks again

On the other hand, European markets were choppy as they pared early day gains following the release of China’s PMI. The downward movement of oil prices also added to the concerns in the European markets. FTSE 100 was trading 0.64% or 38.68 lower at 6,045.11 while Dax shed 59.26 points or 0.60% to 9,738.85. France CAC 40 and Euronext 100 too were down by 0.37% and o.33% respectively. Only Switzerland’s Swiss Market Index gained marginally by 0.16% and was seen trading around 8,333.

The Bank of Japan’s surprise interest cut kept last week left the U.S. markets rejoicing. However, concerns about the economic growth hovered after GDP growth in the fourth quarter was reported at 0.7% versus the forecast of 0.8%. Both Dow Jones Industrial Average and S&P 500 Index closed the last trading session nearly 2.50% higher at 16,466.30 and 1,940.24 respectively.

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