There was mixed news regarding the various European Markit Economics PMIs that have been published this morning. The French Composite PMI reading for services and manufacturing has grown significantly, the print came in at 51.6, the rate of expansion was the sharpest in 31 months.
Similarly, although Germany’s reading was down on that in February and January, the overall mood in the German economy appears to be upbeat despite a slight contraction in orders and output. Overall the European landscape seems to be recovering, as highlighted by the European Composite Index which delivered a reading of 53.2, only a tick below the 32 month high recorded in February of this year.
Investors’ eyes will now focus on the USA PMI due for publication at 13:45 hrs UK time in which the flash manufacturing PMI is scheduled to come in at 56.6, a slight fall from the 57.1 earlier print in the previous month.
Asia-Pacific markets began the new week with significant gains across the boards and this was despite high impact news data revealing that China’s manufacturing base has continued to stagnate this month. HSBC’s flash purchasing managers’ index for March showed that China’s manufacturing sector slowed for a third month in series during March with a reading of 48.1, missing forecasts and falling from 48.5 the month before.
Eurozone recovery prospects brighten as France returns to growth
The euro area economy continued to enjoy its strongest spell of growth since the first half of 2011 in March. The flash estimate of the Markit Eurozone PMI Composite Output Index came in at 53.2, only slightly lower than February’s 32-month high of 53.3 and registering expansion for the ninth consecutive month. In a sign that activity growth could pick up again in April, new order growth accelerated marginally in March to the fastest since May 2011. Also encouraging was the biggest increase in backlogs of work since June 2011. Employment likewise rose, albeit only marginally, up for a second month and providing the first signs of job recovery.
HSBC Flash China Manufacturing PMI
Output contracts at quickest pace in 18 months during March. Key points. Flash China Manufacturing PMI. at 48.1 in March (48.5 in February). Eight-month low. Flash China Manufacturing Output Index at 47.3 in March (48.8 in February). Eighteen-month low. Data collected 12 March 2014. Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said: [quote]The HSBC Flash China Manufacturing PMI reading for March suggests that China’s growth momentum continued to slow down. Weakness is broadly-based with domestic demand softening further.[/quote]
Flash France Composite Output Index rises to 31-month high
French private sector output returned to growth in March. Although moderate, the rate of expansion was the sharpest in 31 months. This was indicated by the Markit Flash France Composite Output Index, based on around 85% of normal monthly survey replies, posting 51.6, up from 47.9 in February. That was the first reading above the 50.0 no-change threshold since last October. Expansion was broad-based across the service and manufacturing sectors. Services activity increased for the first time in five months during March. Growth was at a 26-month high, albeit modest overall. Manufacturers reported a solid rise in output.
Expansion in German private sector activity slows in March
March data signalled further marked growth in Germany’s private sector, with the seasonally adjusted Markit Flash Germany Composite Output Index registering 55.0. Although down from February’s 33-month high of 56.4, the pace of expansion remained marked and above the long-run series average. The easing in the rate of activity growth was broad-based, with both manufacturers and service providers indicating weaker expansions than seen in February. Companies in the goods producing sector reported the slowest rise in output since November, while growth in the service sector eased to a two-month low. In line with a weaker growth trend.
Market snapshot at 10:00 am UK time
The ASX 200 closed up 0.17%, the CSI 300 up 0.82%, the Hang Seng up 1.91%, the Nikkei up 1.77%. In Europe the main bourses have opened in the red; euro STOXX down 0.80%, CAC down 0.80%, DAX down 0.76%, FTSE down 0.36%. Looking towards the New York open the DJIA equity index future is up 0.14%, SPX up 0.19% and the NASDAQ equity index future is up 0.28%. NYMEX WTI oil is up 0.08% at $99.54 per barrel, NYMEX nat gas is up 0.60% at $4.34 per therm. COMEX gold is down 0.88% at $1324.20 per ounce, with silver down 0.79% at $20.15 per ounce.
Forex focus
The yen weakened 0.2 percent to 141.37 per euro early in London and slid 0.2 percent to 102.44 per dollar. Europe’s 18-nation currency was little changed at $1.3799. The yen slid against all of its major peers as the International Monetary Fund said the global economy is improving and due to bets the Bank of Japan will boost stimulus to ease the impact of a tax increase next week.
The Australian dollar advanced 0.1 percent to 90.92 U.S. cents from 90.81 on March 21st after dropping as much as 0.4 percent. The Australian dollar extended a gain from last week as investors maintained bets on a greater than 50 percent chance the nation’s central bank will raise interest rates within a year as the economy strengthens.
U.S. benchmark 10-year yields climbed two basis points, or 0.02 percentage point, to 2.76 percent early in London. The price of the 2.75 percent note due in February 2024 was 99 7/8.
Bonds briefing
The Treasury plans to sell $32 billion in two-year notes, $35 billion in five-year debt and $29 billion in seven-year securities over three days starting tomorrow. It will also sell $13 billion in two-year floating-rate notes on March 26th.
Japan’s 10-year yield rose one basis point to 0.605 percent. Australia’s was as high as 4.18 percent, the most in a week. Treasuries are the biggest-losing government bonds in March before U.S. reports this week economists said will show new home sales were near a five-year high and orders for durable goods rose.
