PMI data boosts markets

Investors were greeted with a higher opening in the FTSE 100 index which has failed to make significant headway above 6275 and is now beginning to pare its gains.

The failure to find a base above this level does tend to give gravitas to the possibility that equity markets are more likely to push lower than retake the recent five-year high. As a slowdown in China becomes remarkably real, with Asian stock markets reacting negatively to the nine-month low in the country’s manufacturing index, European markets have perhaps had good reason to shrug off the poor data as a slew of better-than-expected EU PMI numbers initially boosted sentiment. Spain saw the manufacturing index rise to 50 against an expectation of 48.9, while Italy had its highest figure since July 2011 of 49.1. Beleaguered Greece, not unsurprisingly, was among the laggards but more unexpectedly Germany saw its manufacturing index falter to 48.6.

Overall, markets have reacted positively to the decent fundamentals and while the data is good it may not necessarily enough to hang a bullish hat on given that many of the eurozone countries are coming off such a low base. With the market expecting the EU unemployment rate to come in at 12.3%, yet another record high, it’s probably a little too early to break out the champagne.

The Bank of England’s new governor Mark Carney picked a good day to take the helm as the UK continued its strong run with the PMI number coming in at 52.5 versus the 51.5 consensus. Metals, both base and precious, are staging a rebound and dragging the likes of Polymetal International along. The company has added 2.22%, leaving the defensive sector distinctly out of favour with GKN and Morrisons languishing at the bottom of the UK benchmark.

Later this afternoon, market participants will focus on US ISM manufacturing where a figure of 50.6 is expected. For now, we are expecting to see the Dow open 40 points higher 14,949.

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