China’s manufacturing PMIs surprises

Ahead of China’s week-long holiday, September’s manufacturing PMIs had surprised on the upside, though with the on-going worries over US-China trade, a risk-off sentiment sustains.

Manufacturing sector seen stabilizing

Kicking start a data-centric week, we have seen China’s official manufacturing PMI out of the National Bureau of Statistics (NBS) suggesting an improvement to 49.8 against the market’s consensus of an unchanged 49.5 from August. This nevertheless marks the fifth consecutive month seeing the sector in contraction territory while the non-manufacturing PMI slipped slightly to 53.7, down from 53.8.

What was instead more surprising had been China’s Caixin manufacturing PMI reading coming in at the highest since February 2018 at 51.4. The market had pencilled in a decline to 50.2 from 50.4 in August. New orders and output had notably improved to reflect further signs of stabilization despite fresh tariffs from this private gauge.

To some extent, this further backs the People’s Bank of China’s (PBoC) stance of being in ‘no rush’ to add stimulus to cope with the downward pressure upon the economy. Furthermore, as suspected, the policymakers’ intent to wait and see the impact from the earlier series of policy support for the economy including the likes of tax cuts and special local government bonds to finance infrastructure projects appear to be bearing fruit with this leading indicator reflection.

Trade woes overshadow for Asia markets

The above said, the start of the fresh trading week continues to reflect the focus on US-China trade tensions which remains a key driver for Asia markets. Prior to China’s 70th National Anniversary, the White House’s latest consideration of limiting investments in China continues to highlight the woes between the two sides. Although clarification did come through and the market is unlikely to rush to price in the worst-case scenario, it remains a dent for sentiment which could continue hailing cautiousness within the market ahead of the trade talks in October.

Against such a backdrop, look to a risk-off tone to continue being the case for Asia markets going into the fresh week, keeping that bias for USD/Asian upsides and likewise with Asia markets.

Friday: S&P 500 -0.53%; DJIA -0.26%; DAX +0.75%; FTSE +1.02%

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.