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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.