Morning Meeting: Markets life-line
Asian markets this morning trimmed early losses as the China HSBC Flash Manufacturing Purchasing Managers Index (PMI) rose to a three-month high of 49.1 in October, also registering the most robust order books since April, signaling a strengthening recovery. Among leading sub-indexes, readings for output, new orders and new export orders all indicated contraction, but their pace of decline slowed from levels in the prior month. Among the weak spots in the report, employment conditions and backlogs both pointed to accelerating deterioration.
Stocks came off their lows following the data release, with the Hang Seng Index up 0.25% to 21,752.54 compared to its early loss of 0.6%. The Shanghai Composite Index swung to gains of 0.35% to 2,121.75 after trading down 0.3% minutes after the opening bell. Japan's Nikkei traded 0.08% lower to 9,006.85 recovering from an earlier drop of more than 1%.
The data spurred optimism that the Chinese growth have bottomed last month, supporting last week industrial output and retail sales readings although today's headline number were below the 50 mark dividing expansion from contraction.
On the currency side, the dollar was steady against the yen at 79.84 yen, having hit its highest since early July of 80.02 on Tuesday. The Australian dollar rose to a high of $1.0317 after the Chinese data, having earlier risen from around $1.027 following data showing Australian consumer prices increased a surprisingly large 1.4 percent last quarter, lowering expectations for interest rate cuts. The Aussie rose 0.5 percent against the yen to 82.33 yen, helping the euro to steady against the yen at 103.70 yen. The euro touched a 5/1-2 month high against the yen of 104.45 in yesterday's trading, the common currency rose 0.02% versus the greenback to 1.2989$ as Germany's Sueddeutsche Zeitung paper reported in its Wednesday edition, without citing sources, that eurozone states will grant Greece an extra two years to bring its budget deficit to within agreed targets.
The news if confirmed will offer support to European markets, still on the waiting line for Spain to ask for a bailout and Greece to agree to conditions attached by its global lenders in exchange for a further bailout. But investors will be searching for support into numbers today with Eurozone PMI (Manufacturing PMI exp at 46.6 vs 46.1 prior, Service PMI exp. at 46.5 vs 46.1 prior) and German IFO Business Climate (exp. at 101.5 vs 101.4 prior) due later in the day.
Sober investor sentiment sparkled the move in the Oil market where Crude for December delivery rose 0.83% to $87.38 after dropping more than 2% in yesterday's trading, supported in part also by a lower dollar, which pushed the Gold 0.12% higher to 1,711.50$.
At this point the question is: will the Chinese PMI offer the life-line to European markets today?
Markets will answer the question in few hours, we will keep our eyes focused on market's supports waiting for the market to show us if we need to go for a breakout play or for a fade, this is the reason why the pillars of your game plan are your “what-if” statements.
Have a great day.
Originally posted at www.77sigmatrading.com
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.