Chinese Markets Ride Manufacturing Pmi High

Stocks

Summary:

Chinese markets have put on an extraordinary performance this morning, boosted by better-than-anticipated manufacturing purchasing managers’ index data and hopes of further stimulus from Beijing in the latest leg of a rally that has been bubbling under for a month.

The China 50 index rallied by almost 8% on the session, the broader Shanghai Composite is up by 7.2% and Hong Kong's Hang Seng by almost 3%. KWEB US, the China internet ETF, has rallied 32.9% over the month, while Alibaba has put on 31.77% in that time and rival JD.com has rallied by almost 40% in the last week and 51.25% in the last month. Much of these gains will come down to investors and traders anticipating a full-blown recovery in the Chinese economy. It wasn't all good news in Asia, however, as Japan’s Nikkei 225 fell by almost 5% as the yen strengthened on the foreign exchanges. USD/JPY is trading at ¥141.99 in Europe, though interestingly the US dollar index is weakening at the same time, perhaps suggesting that there is more to the story than meets the eye.

Turning back to Friday's close, the S&P 500 energy sector finished the week with a 2.11% rally, led by stocks such as APA and Baker Hughes, which were up by 5.96% and 4.06% respectively. The trend could continue as oil prices have picked up again this morning, with WTI up by 1.43% and Brent crude by 1.64% on concerns about escalation of the conflicts in the Middle East, and any potential supply disruptions that could cause. The information technology sector, which has led the market for much of 2024 to date, finished Friday down by 0.96%, though on the week it was up by more than 1.1%. The S&P 500 was down by 0.23% on Friday and up by 0.62% on the week, and to some extent it felt like the index was waiting for the next catalyst. That could come in the shape of Friday’s non-farm payrolls report for September.

There were bigger moves in European equity indices last week, and not just from the usual suspects. The Euro Stoxx 50 was up 4%, and the CAC 40 3.9%, but they were outshone by the DAX Midcap index, which rallied by 5.3% on China revival hopes. At a sector level, the Euro Stoxx Personal and Households Goods index jumped by 14.4% last week, led by components like Christian Dior which rallied by 19% on the week. However, European equity indices have opened lower this morning, with the Italian MIB down by 0.71% at the time of writing.

Copper has rallied by over 1% in early European trade, on course for an 11% monthly gain. Gold and silver are flat this morning, though with the potential to book substantial gains for September as a whole Tin continues to rally, up 1.47% this morning, 2.45% over the last week, and by almost 30% over the last 12 months.

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Chinese Markets Ride Manufacturing Pmi High

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