Morning all.
In the early hours of this morning China released PMI data for February and it does not make good reading.
Manufacturing: 35.7 versus expected of 45.0
This is the lowest ever recorded for this indicator
Non-Manufacturing 29.6 versus expected 51.0
Another record low number.
A recording under 50 means contraction and over means expansion.
Manufacturing was expected to contract following a figure of 50 for January, as business closures and quarantine measures took their effect but it looks like the extent of this drop has caught analysts off-guard.
With attention being focused on supply chain stresses at the moment it’s likely that March will also report weak numbers and this will feed into poor looking Q1 GDP forecasts.
With Korea now starting to shutter some manufacturing operations and Italy potentially in the crosshairs of seeing some effect, you have to wonder about what PMI reports from other countries are going to show as they are released, moreso for March, dragging on the effect of all this.
I think some of the late day buying in markets yesterday was partially about these ‘expected’ numbers showing that China hasn’t done all that bad despite the problems, but that has not been realised and it could result in a new bout of negative sentiment Sunday night went Asian markets start the new week.
There’s still plenty of news flow to come before markets restart though so things can change but at the moment it looks like another tricky week is on the cards.
Thanks for your time.
$China50 $HKG50 $SPX500 $NSDQ100
