2nd September 2014 - Global Economic Indicator Update
Major Global Indexes:
FTSE 100 6,825.31 (+0.08%)
Dax 9,479.03 (+0.09%)
Nikkei 225 15,668.60 (+1.24%)
Hang Seng 24,709.32 (-0.17%)
Dow Jones (29/8) 17,098.45 (+0.11%)
S&P 500 (29/8) 2,003.37 (+0.33%)
Asian markets were mixed today as key economic data was released in China and Japan, stirring different reactions.
In China, the official PMI (Purchasing Managers Index) was released and saw its first drop in 7 months. With an Actual PMI score of 51.1 for August the figures just missed the forecast of 51.2 yet where significantly lower than last month's 51.7. HSBC's independent data is expected to show a substantially lower figure of 50.2 which would be at its lowest for 3 months. Next week see's the release of a host of key data and many will be expecting a slowdown in the Chinese Economy towards the end of the year.
Japanese markets rallied after positive data on wages helped show that the Abenomics could be working. Up 1.2% on the day the markets were spurred by a 2.6% increase in the average wage over the same time last year. The increase was largely attributed to bonus payments however increased household income was a key driver factor of the Bank of Japans economic stimulus plan. On Thursday the BoJ will make its interest rate decision and little in the way of policy changes are expected.
European indexes are expected to open level today as the markets wait on the ECB's meeting and subsequent announcements later this week on Thursday. Yesterday saw confirmation that the Eurozones manufacturing sector is feeling the pinch as Markit's PMI showed August down to 50.7 from July's 51.8. There is no doubt that some EU members are starting to feel the implications of the issues with the Ukraine and Russia and the sanctions being imposed which are starting to take effect. Germany, one of Russia's biggest trading partners saw their PMI drop to 51.4 and France, the EU's 2nd largest economy dropped even further to 46.9. Together with Italy, Spain and Holland the EU is in a dire position that requires stimulus, it's just a question of when not if. Although some positivity is expected on Thursday, it is not predicted that any actual policy announcements will be made this quickly.
After the US's Labour Day holiday yesterday it is back to business with the ISM manufacturing data which will be released towards the end of the day. Consumer confidence has been seen to be high over the past few months and the continued capital inflow to the markets is proof in point that the US economy is finally expanding at a good clip. The markets are expected to open higher amid a whole host of geopolitical tensions that seem to have no effect on the record breaking US indexes. At the end of the week employment data will be released and this seems to be one of the key areas acknowledged that needs to improve. Unemployment has started to decrease yet the wage to inflation ration is getting no better and even as the Federal Reserve exits their asset buying program in earnest, they have said that the government will need to address this as a matter of fiscal policy, not monetary. US markets will also been keen to see what the ECB in Europe will look to do as they too have quite a far amount of exposure to the European Union and will want to know that steps will be taken to attempt to shore up the economy.
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