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Equities Rebound, China Data Shows Expansion, Brexit Votes On Tap…Again

By:
Thomas Hughes
Updated: Apr 1, 2019, 15:36 UTC

Chinese manufacturing activity expands for the first time in four months and global equity markets cheer.

Wall Street Vintage

The U.S. Equities Rebound Sharply

The U.S. equities were indicating a sharply higher open on Monday following positive trade news and expansionary economic data from China. In trade news, last week’s round of talks in Beijing were productive according to insiders. This week Chinese Vice Premier Liu He travels to Washington to extend progress made on key issues. In economic news, Chinese manufacturing activity expanded for the first time in four months. The news comes as a surprise, economists had been predicting a contraction in the data.

The NASDAQ Composite was in the lead in the premarket. The tech-heavy index was indicating an open near 1.0% above Friday’s close and the other major indices were close behind. The blue-chip Dow Industrials and broad-market S&P 500 were both looking at gains near 0.75%.

Conversely, U.S. economic data was not so rosy. U.S. retail sales fell at the headline and core levels despite expectations for gains. The news is contrary to strong labor market conditions but may be impacted by the Government Shutdown. The headline retail sales figure fell -0.2% versus an expected 0.3% gain, core retail sales fell -0.4% versus an expected 0.40%.

European Markets Up On China, Brexit Worries Weigh

European equity markets were moving higher at midday following the strong China data. The German DAX was up 1.12% leading the charge with the FTSE and CAC both advancing about 0.75%. Basic resources and miners led the advances with gains greater than 1.0% while the automakers were also showing strong movements. Shares of Fiat-Chrysler were among the best performers after it revealed it was in talks with PSA Group on cooperation in Europe.

In economic news, European manufacturing PMI came in below expectations. The all-EU manufacturing index fell a tenth to 47.5 as activity in the bloc continues to shrink. On the inflation front, the all-EU CPI came in below expectations as well. Weaker than expected CPI points to further easing by the ECB and weakened the euro.

China Up On PMI Data

Asian indices were broadly higher following the Chinese PMI data. Mainland Chinese indices were in the lead with gains greater than 2.5%. The Hong Kong Hang Seng was the next best performer at 1.76% followed by a 1.43% increase in the Japanese Nikkei and 1.29% gain for the Korean Kospi. The Australian ASX was the laggard but even it posted a gain of 0.60%.

In China, both the Caixin/Markit and official PMI data was better than expected. Both data points rose above the 50-level for the first time in four months as Chinese macro-policy takes effect. The PBOC and central government have been stimulating the economy in an effort to counter the effects of trade tensions. The Caixin PMI, a measure of small and mid-cap stocks, rose to 50.8 while the large and ma

About the Author

Thomas has been a professional options trader and investor since October 2005. At that time, Thomas was introduced to financial markets, technical analysis, and financial market analysis. He tracks economic data from the worlds leading economies, corporate earnings, equities, currency, commodities, and cryptocurrencies.

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