Mondays market view: Global PMI data in focus – Oil rally cools

by 23 Apr, 2018

Monday’s market view – PMI data in focus

European and Asian markets fell in early trading this Monday despite the release of fresh PMI (Purchasing Managers Index) data, which showed an expansion in economic activity for nations across the 2 continents in April.

Japan was first up to announce figures, releasing positive PMI data for its manufacturing industry. The flash Markit / Nikkei Japan PMI rose to 53.3 in April, indicating a growing manufacturing sector – good news for Japan’s economy!

In Europe we saw a mixed picture. Services PMI’s for Germany and France were strong but manufacturing PMI’s slipped lower, indicating a loss of confidence among industry executives. The overall numbers indicate the Eurozone economy is still growing at a steady pace after a stellar 2017 performance, which may help European indices to rally later today after this period of initial weakness. We are also waiting for the release of US services and manufacturing PMI’s. If they beat expectations, the Dollar could rally today, so keep an eye on it.

PMI data is important because it serves as a metric for judging the health of a countries economy.

Oil rally cools for now

The price of oil slipped this Monday after a major price rally over the last 2 weeks. Rising levels of US drilling and production is a key factor pulling down crude prices, but sentiment is still bullish given high levels of demand for oil in Asia. One J.P. Morgan strategist said in a note to clients: “Stay long oil”.

Investors eye Washington’s plans for China and North Korea

On the geopolitical front, President Trump said on Sunday the North Korean nuclear crisis was a long way from being resolved, striking a cautious note a day after the North pledged to end its nuclear tests. So much hinges on the upcoming US/NK summit, but given that Trump’s pick for Secretary of State Mike Pompeo already met Kim Jong Un recently in what Trump described as a “smooth” meeting, expectations are high the situation can be resolved. Any positive breakthrough could cause a big rally in global stock markets.

Elsewhere, US Treasury Secretary Steven Mnuchin said he may go to China to ease trade tensions between the world’s foremost superpowers – a move which could boost investor sentiment too.

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