China’s Manufacturing PMI data surprisingly beat market consensus.
The official Manufacturing PMI reads 51.7, an advance from 51.2 in the previous month. This signals solid growth in the manufacturing sector, defying assumptions that China factory activities were cooling in June. Consensus sees PMI to fall from 51.2 to 51 in the previous month as the ongoing deleveraging campaign and end-of-inventory build-up cycle might drag economic growth.
Shanghai Composite was hovering around 3,150 points recently, as a tight monetary environment and higher interest rate suppressed investors’ willingness to enter the market. Shanghai Composite registered a year-to-date return of 2.7%, far underperforming the Hong Kong stock market during the same time.
Wall Street gave out Wednesday’s gains as investors re-evaluate central bank’s tightening policy. Forex and equity markets are becoming more sensitive towards the policymaker’s timeline regarding when and how to exit the unprecedented post-crisis quantitative easing plan. One thing is for sure – we are embracing a tightening cycle, it is only just a matter of time. Lack of progression in Donald Trump’s fiscal stimulus and tax reform also weighs on market sentiment.
Asian equity markets soared on Thursday but may face some correction today following a lower closing in the US market. Asian-listed banks rallied yesterday due to favourable stress test results from almost all the big US banks,. HSBC (5 HK) jumped over 6% to HK$72.8 -its highest level in two years. Singapore banks rallied too, with all the three local banks namely DBS, UOB and OCBC advancing nearly 2%. Rebound in crude oil price also led to surge in Singapore’s offshore & marine sector yesterday.
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