Markets manufacture a boost

The weekend has overseen yet another batch of Chinese data which, given their mixed nature, has paved the way for an indecisive start to trading in the FTSE 100 as the markets open into the historically volatile first week of the month. 

Canary Wharf
Source: Bloomberg

The initial lower open in European futures markets have since given way to strong upside momentum, yet with significant losses in the FTSE from last week, bearish technical signals threaten further downside for the week.

The release of Chinese manufacturing PMI figures over the weekend show continued contraction remains, providing further evidence that the Chinese slowdown continues to roll on, despite the decline easing somewhat. However, the message was not all doom and gloom, with the private Caixin reading rising by the greatest amount in 15 months despite remaining well in contraction.

Today sees markets focusing on manufacturing PMI readings, with European, UK and US figures all released following the Chinese numbers released over the weekend. With US (13%) and UK (10%) manufacturing accounting for a minority of their GDP, it is clear that today’s reading may not be a big deal breaker for the economy. However, given that the UK GDP was heavily impacted by weak construction activity, it is clear that the somewhat secondary manufacturing sector does have the capability to derailing growth given the chance.

The huge outperformance of the UK manufacturing PMI gives yet another nod to Mark Carney that the UK economy is booming, despite a weaker-than-expected Q3 GDP figure last week. The 16-month high of 55.5 smashed estimates and was among the biggest monthly gains seen since the inception of the survey 24 years ago. Improved business in both domestic and export sector shows brand UK is well and truly booming once more.

Ahead of the open, we expect the Dow Jones to open 92 points lower, at 17,701.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Een artikel zoeken

Form has failed to submit. Please contact IG directly.

  • Ik wens per e-mail informatie van IG Group bedrijven te ontvangen over handelsideeën en IG's producten en diensten.

Voor meer informatie over hoe wij uw gegevens mogelijk kunnen gebruiken, bekijkt u ons Privacy- en toegangsbeleid en onze privacy website.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.