Asian, European stocks briefly up on China PMI
European stock market trading started in the green after the Flash China Manufacturing PMI figure, which came in at a 3-month high
Chinas output contraction slowed in October, pushing the Flash Manufacturing PMI to 49.1, still below the 50 level that separates contraction from expansion but well above Septembers 47.9.
Manufacturing output rose to 48.4 in October from Septembers 47.3, hitting a 3-month high.
European stock markets opened in the green after the data, which also pushed up Chinese shares. China's Shanghai Composite was Asias best performing index after the news, while in Europe the FTSE 100 was up 0.1%, the CAC-40 rose 0.5% while Germanys DAX was up nearly 0.2% Wednesday morning.
They later fell as German PMI fell to a 2-month low of 48.1.
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The level (of the PMI index) is less important at this stage than the direction, in that it is showing a clear direction in momentum, Halpenny said.
The new orders component reached a 6-month high offering further evidence of a turn that could prove sustainable, he added.
New orders and new export orders contracted at a slower rate, and so did stocks of purchases and quantity of purchases.
The new order-inventory balance improved markedly for the second month in a row, suggesting that there will be less need to cut inventories in the coming months, Flemming Nielsen, senior analyst at Danske bank, said.
Chinese employment and backlogs of work both contracted at a faster rate while stocks of goods, which had been rising, shrank.
Output and input prices both increased, changing direction and possibly fanning fears of inflation further down the road.
A Peoples Bank of China (PBOC) deputy governor said during the IMF/World Bank meetings in Tokyo that quantitative easing in the developed world risked pushing up prices in China.
Earlier easing measures by the PBOC helped with the gradual improvement in new orders, according to Hongbin Qu, chief economist for China at HSBC.
However, external challenges still abound and the pressures on the job markets are lingering, Qu said. This calls for a continuation of policy easing in the coming months to secure a firmer growth recovery.
Only moderate easing is likely to occur as the HSBC flash manufacturing PMI should be slightly above 50 by the end of the year, Nielsen said.A 50 basis points cut in the reserve requirement before year-end is still possible but we no longer expect the leading interest rates to be cut, he said. No additional fiscal stimulus at this stage either, in our view.