Chinese PMI data gives traders the ‘green light’
00:00, 02 septiembre 2013
Chinese-derived optimism drove Asian markets higher to start the week with investors taking an obvious liking to the latest manufacturing indicators from the world’s second largest economy.
Both the official Manufacturing PMI number released over the weekend as well as the HSBC reading today put investors back in a buying frame of mind despite the ongoing Syrian issue as well as the possible ‘event risk’ markets face later in the week when the latest US jobs data is released. However, regardless of the looming obstacles traders today were more than content to focus on the growth story stemming from the Chinese PMI prints.
The Australian dollar received a much needed ‘shot in the arm’ courtesy of the latest Chinese PMI readings, with the currency pressing higher today having dipped below the US$0.89 level on Friday. Today, the Australian dollar gained around three-quarters of a cent from where it closed last week with traders generally in a buoyant mood to start the week. The Australian dollar is particularly sensitive to Chinese manufacturing indicators so it was no surprise to see the currency rally quite strongly today with Chinese growth appearing to be back on track. The Australian dollar was also aided by the release of a particularly strong Building Approvals number today (+10.8%). However, if the Australian dollar has designs on pushing back above the US$0.90 much will hinge on what sort of tone is struck by the RBA on Tuesday.
Australian equities went ahead leaps and bounds today with our market mirroring gains seen elsewhere across the region. The AUSTRALIA200 was able to disregard the negative offshore lead with emphasis instead being placed on the upbeat Chinese manufacturing numbers (released both over the weekend and also today). The healthy looking Chinese indicators appeared to give investors the ‘green light’ to take on board risk and this resulted in good buying momentum across high-yielding assets today. However as the week progresses and we start to see some US jobs numbers released (starting with the ADP data), I am sure the market will again refocus on possible tapering efforts and the potential growth implications of this.