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September’s Chinese manufacturing PMI reading, at 50.1, has finally broken a three-month trend below the 50 level which separates growth from contraction. The catalyst for this improvement is undoubtedly the Chinese government’s initiative to support growth, and this is arguably the first real proof that it’s working. The FTSE's commodity-based companies appear to have benefited more than spot commodity prices so far today.
It will be hoped that this is not a one-off month of growth, but the beginning of a more stable period for the Chinese manufacturing industry. Neither Europe or the US has been able to make up for the downturn in demand since the Chinese economy started cooling, and it does feel that it is down to China to kick-start a meaningful recovery in copper and other commodities.
More circumspect traders will probably point towards the cooling markets of India, South Korea and Indonesia, but the influence of those countries is dwarfed by the Chinese economy.