Tag Archives: PMI

Business

European stocks up as investors see signs Fed could slow rate rises

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LONDON, Oct 25 (Reuters) – European stocks rose in early trading on Tuesday, as investors took confidence from signs that the U.S. Federal Reserve could slow down its rate increases, although concern about China’s economy still weighed on Asian markets.

Asian equities struggled to make gains due to uncertainty over whether Xi Jinping’s new leadership team would prioritise economic growth. China’s onshore yuan finished the domestic session with its weakest close since late 2007 .

European stock indexes opened higher, with the STOXX 600 up 0.4% at 0809 GMT (.STOXX).

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The MSCI world equity index, which tracks shares in 47 countries, was up 0.1% on the day (.MIWD00000PUS) and MSCI’s main European Index (.MSER) hit a five-week high, up 0.8% on the day (.MSER).

“The proximate cause appears to be some hope that the pace of central bank tightening may start to slow later this year and that’s giving some investors cause to be relieved,” said Hani Redha, a portfolio manager at Pinebridge Investments.

U.S. business activity contracted for a fourth straight month, data on Monday showed, suggesting that the Fed’s rate increases have softened the economy, which in turn raised hopes that the central bank could begin slowing the pace of the hikes.

The expected peak for Fed rates has edged down to around 4.93%, from above 5% early last week .

Economists polled by Reuters said that the central bank should not pause until inflation falls to around half its current level.

Some better-than-expected earnings results also supported European stock market sentiment, with Swiss bank UBS (UBSG.S) among those beating market expectations. But Europe’s largest bank, HSBC, reported a 42% slump in third quarter profit, prompting a 4% fall in its shares (.HSBA.L).

Tech giants Alphabet and Microsoft report earnings later in the session.

Pinebridge’s Redha said that earnings estimates have been edging lower in recent months but that the pace of this has been “fairly modest”.

“The potential relief that investors feel in terms of coming towards the end of the hiking cycle, that seems to dominate over the grinding lower of earnings estimates.”

The U.S. dollar index was a touch higher on the day, up 0.1% at 112.01 .

The euro slipped, down 0.1% at $0.98675 . The European Central Bank meets on Thursday and is set to raise rates by 75 basis points.

The British pound was up 0.2% at $1.1309 . It recovered from session lows and gilt yields fell sharply on Monday in a sign of investor relief when it was announced that former finance minister Rishi Sunak would be the next prime minister.

Euro zone government bond yields were down, with the benchmark German 10-year yield down 7 bps at 2.272% .

German business morale fell slightly in October but the data still beat analyst estimates.

The data “suggests that at least business sentiment is forming a trough”, said ING global head of macro Carsten Brzeski in a client note. “This, however, does not mean that any improvement in the economy is near.”

Oil prices were up, although gains were limited by fears about slowing growth in the United States and China.

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Reporting by Elizabeth Howcroft

Our Standards: The Thomson Reuters Trust Principles.

Elizabeth Howcroft

Thomson Reuters

Reports on the intersection of finance and technology, including cryptocurrencies, NFTs, virtual worlds and the money driving “Web3”.

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Business

Wall Street closes with sharp gains as final quarter begins

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  • Tesla down as Q3 deliveries miss market estimates
  • U.S. factory activity slowest in ~2.5 years in Sept -ISM
  • Credit Suisse, Citi cut 2022 year-end target for S&P 500
  • Indexes up: Dow 2.66%, S&P 500 2.59%, Nasdaq 2.27%

Oct 3 (Reuters) – Wall Street’s three major indexes rallied to close over 2% on Monday as U.S. Treasury yields tumbled on weaker-than-expected manufacturing data, increasing the appeal of stocks at the start of the year’s final quarter.

The U.S. stock market has suffered three quarterly declines in a row in a tumultuous year marked by interest rate hikes to tame historically high inflation, and concerns about a slowing economy.

“The U.S. yield markets (are) pulling back – that’s been a positive … and that connotes a more risk-on environment,” said Art Hogan, chief market strategist at B. Riley Wealth in Boston.

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Further supporting rate-sensitive growth stocks, the benchmark U.S. 10-year Treasury yield fell after British Prime Minister Liz Truss was forced to reverse course on a tax cut for the highest rate.

All 11 major S&P 500 (.SPX) sectors advanced to positive territory, with energy (.SPNY) being the biggest gainer.

Oil majors Exxon Mobil Corp (XOM.N) and Chevron Corp rose more than 5%, tracking a jump in crude prices as sources said the Organization of the Petroleum Exporting Countries and its allies are considering their biggest output cut since the start of the COVID-19 pandemic.

Megacap growth and technology companies such as Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O) rose over 3% respectively, while banks <.SPXBK> advanced 3%.

Data showed manufacturing activity increased at its slowest pace in nearly 2-1/2 years in September as new orders contracted, likely as rising interest rates to tame inflation cooled demand for goods. read more

The Institute for Supply Management said its manufacturing PMI dropped to 50.9 this month, missing estimates but still above 50, indicating growth.

“The economic data stream actually came in worse than expected. In a very counterintuitive fashion that likely represents good news for equity markets,” said Hogan.

“(While) good economic data, strong readings had been a catalyst for selling, this is the first time we’ve actually seen some negative news be a catalyst.”

All three major indexes ended a volatile third quarter lower on Friday on growing fears that the Federal Reserve’s aggressive monetary policy will tip the economy into recession.

The Dow Jones Industrial Average (.DJI) rose 765.38 points, or 2.66%, to 29,490.89; the S&P 500 (.SPX) gained 92.81 points, or 2.59%, at 3,678.43; and the Nasdaq Composite (.IXIC) added 239.82 points, or 2.27%, at 10,815.44.

Volume on U.S. exchanges was 11.61 billion shares, compared with the 11.54 billion average for the full session over the last 20 trading days.

Tesla Inc (TSLA.O) fell 8.6% after it sold fewer-than-expected vehicles in the third quarter as deliveries lagged way behind production due to logistic hurdles. Peers Lucid Group (LCID.O) gained 0.9% and Rivian Automotive (RIVN.O) fell 3.1%. read more

Major automakers are expected to report modest declines in U.S. new vehicle sales, but analysts and investors worry that a darkening economic picture, not inventory shortages, will lead to weaker car sales. read more

Citigroup and Credit Suisse became the latest brokerages to lower 2022 year-end targets for the S&P 500, as U.S. equity markets bear the heat of aggressive central bank actions to tamp down inflation. read more

Credit Suisse also set a 2023 year-end price target for the benchmark index at 4,050 points, adding that 2023 would be a “year of weak, non-recessionary growth and falling inflation.”

Advancing issues outnumbered decliners on the NYSE by a 5.04-to-1 ratio; on Nasdaq, a 2.70-to-1 ratio favored advancers.

The S&P 500 posted one new 52-week high and 23 new lows; the Nasdaq Composite recorded 58 new highs and 282 new lows.

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Reporting by Echo Wang in New York; Additional reporting by Ankika Biswas and Bansari Mayur Kamdar in Bengaluru; Editing by Anil D’Silva, Arun Koyyur and Richard Chang

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Business

Q4 off to shaky start as stocks stumble, but oil jumps

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LONDON, Oct 3 (Reuters) – The final quarter of the year got off to a shaky start on Monday, with world stocks languishing at their lowest levels since late 2020 – when the global economy was still reeling from the COVID-19 pandemic.

Oil prices jumped more than 4% as the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, said it would consider reducing output, while sterling rallied after the British government said it would reverse a controversial tax cut that had rocked UK markets.

But sentiment across markets remained frail given worries that aggressive interest rate hikes from the U.S. Federal Reserve and others raise global recession risks.

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European equity markets were a sea of red, with the STOXX 600 index down 0.4%, pulling back from earlier losses of 1.4% (.STOXX). Shares in beleaguered Swiss bank Credit Suisse (CSGN.S) fell around 10% in early trading, reflecting market concern about the group as it finalises a restructuring programme due to be announced on Oct. 27.

Asian stocks mostly fell in holiday-thinned trade although Japanese markets found support on strong energy and semiconductor shares (.N225).

U.S. stock futures were mixed and MSCI’s world equity index (.MIWD00000PUS) fell to its lowest level since late 2020.

News of the British government’s tax U-turn didn’t appear to lift broader sentiment but probably helps to calm market worries about fiscal excess, said Kallum Pickering, senior economist at Berenberg Bank in London.

“Markets seem to have lowered their expectations for the BoE bank rate while gilt yields have fallen further from their recent highs. Less tight financial conditions may ease the near-term shock on economic performance,” said Pickering.

MSCI’s 47-country world stocks index rallied 10% between July and mid-August. But aggressive Fed rate hikes soon came swinging back in, and that index has plunged 15% since, leaving it down 25% and $18 trillion so far this year.

Central banks in Australia and New Zealand meet this week and are expected to deliver further rate increases.

Oil prices rallied on reports what OPEC+ will this week consider cutting output by more than 1 million barrels a day, for its biggest reduction since the pandemic, in a bid to support the market. Brent crude futures rose more than 4% to almost $89 a barrel and U.S. West Texas Intermediate crude was up 4.5%, at $83 a barrel.

UK RESPITE

Britain’s battered pound was up around 0.4% at $1.12085 and its government bond yields fell, pushing their price up, following the UK policy reversal , .

“From a market perspective, it is a good step in the right direction. It will take time for markets to buy the message but it should ease the pressure,” said Jan Von Gerich, chief analyst at Nordea. “Questions still remain and sterling will likely remain under pressure.”

London’s FTSE-100 stock index was down 0.5% (.FTSE), falling in line with other markets.

Japan’s yen meanwhile briefly fell as low as 145.4 to the dollar even as Japan’s finance minister, Shunichi Suzuki, said that the government would take “decisive steps” to prevent sharp currency moves.

It was the first time the yen has fallen through the 145 barrier since Sept. 22, when Japan intervened to prop up its currency for the first time since 1998.

Trade across Asia was generally subdued. South Korea had a national holiday and China entered its “Golden Week” break on Monday. Hong Kong is closed for a public holiday on Tuesday.

Gold was just 0.4% firmer to $1,665.79 an ounce .

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Reporting by Dhara Ranasinghe, additional reporting by Sam Byford in TOKYO; Editing by Hugh Lawson and David Evans

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Business

China’s factory, services surveys suggest economy struggling to rebound

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  • China Sept official manufacturing PMI above forecast
  • Private survey shows factory activity contracted sharply
  • Services sector activity growth slowed in Sept – official survey
  • COVID curbs, softening foreign demand, property weakness weigh

BEIJING, Sept 30 (Reuters) – China’s factory activity eked out growth in September, but a slowdown in services sector growth and a downbeat private manufacturing survey pointed to further cooling as the economy grapples with COVID-19 curbs and softening global demand.

China’s official manufacturing purchasing managers’ index (PMI) rose to 50.1 in September from 49.4 in August, the National Bureau of Statistics (NBS) said on Friday, beating expectations.

The index’s return to growth, after two months of contraction, was helped by recent easing measures, but the private Caixin survey showed factory activity slumped more quickly in September and the official survey showed a sharp slowdown in services sector activity growth.

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Signs that the world’s second-largest economy is struggling to regain traction after narrowly avoiding contraction in the second quarter, could add to concerns about a global recession, as major central banks embark on the most aggressive round of rate rises in decades.

“The surveys suggest that China’s economy continued to lose momentum in September, with the global downturn weighing on exports and virus disruptions dealing a fresh blow to services activity,” Zichun Huang, an economist at Capital Economics, said in a note.

Elsewhere in Asia, data showed South Korea’s factory production shrinking for a second month in August, but a separate release showed Japan’s factories ramping up output again last month.

MARGINAL GROWTH

China’s official manufacturing survey showed factory activity grew marginally in September, beating expectations for a reading of 49.6 in a Reuters poll of economists, and coming in above the 50-point mark that separates contraction from growth. China’s government has rolled out more than 50 policy measures since late May.

“With the basket of economic policies coming into effect and the impacts of heatwaves fading, the manufacturing sector has picked up, leading to the PMI return to expansionary territory,” said Zhao Qinghe, a senior statistician at the NBS, in a statement.

COVID outbreaks dragged down businesses in retail, aviation, accommodation and catering sharply, Zhao said, adding that a government-led infrastructure push accelerated construction activity.

The official survey showed non-manufacturing PMI falling to 50.6 in September from 52.6 in August. The official composite PMI, which includes manufacturing and services, fell to 50.9 from 51.7.

The private Caixin survey also released on Friday showed factory activity contracted at a sharper pace in September, with indexes for output, new orders and employment all declining due to weak demand. The Caixin survey typically covers smaller, export-oriented companies.

The releases come as the yuan hit its weakest level since the global financial crisis in 2008 this week even as the People’s Bank of China (PBOC) made betting against the yuan more expensive and warned against speculative yuan trading.

“Pressure on the yuan also means that the PBOC is constrained in its ability to provide monetary support,” Huang added.

Reuters Graphics Reuters Graphics

EXTERNAL DEMAND WEAKENS

The official manufacturing PMI survey showed the new export orders index dropping to 47.0 from 48.1 in August, a trend also reflected in the private Caixin survey. External demand has been hit by rising interest rates, high inflation and the war in Ukraine.

“(The) export order index eased further … pointing to weakening external demand as the monetary policy tightening has brought in recession concerns in the developed economies,” said Zhou Hao, chief economist at Guotai Junan International.

“If the external demand weakens further, the Chinese economy will have to turn more emphasis to domestic demand.”

The official manufacturing survey also showed new orders and employment shrinking, albeit more slowly, amid stricter coronavirus curbs in multiple cities including Shenzhen and Chengdu.

The release is one of the last official economic indicators to be announced before China’s ruling Communist Party Congress in mid-October.

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Reporting by Ellen Zhang and Ryan Woo; Editing by Ana Nicolaci da Costa

Our Standards: The Thomson Reuters Trust Principles.

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Business

Asia stocks fall after Wall Street slump; China PMI beats estimates

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Japan movers: Softbank, Nintendo, Toyota fall

Apple suppliers in Asia fall after analyst downgrade

China reports better-than-expected factory activity for September

China’s official manufacturing Purchasing Managers’ Index surprisingly grew in September to 50.1, much higher than the 49.6 predicted by analysts in a Reuters poll.

The 50-point mark separates growth from contraction. PMI prints compare activity from month to month.

Meanwhile, the Caixin/S&P Global manufacturing Purchasing Managers’ Index, a private survey of factory activity — reported a contraction with a reading of 48.1.

“Subdued demand conditions and lower production requirements led firms to cut back on their purchasing activity in September, with the rate of decline the quickest in four months,” the Caixin press release said.

The official non-manufacturing PMI came in at 50.6 in September, down from 52.6 in August.

— Abigail Ng

Factory activity in China expected to contract again

China’s official manufacturing Purchasing Managers’ Index for September is expected to come in below the 50-point mark separating growth from contraction, according to a Reuters poll of analysts.

Economists expect a figure of 49.6, slightly higher than August’s 49.4, which would mark the third consecutive month of contraction.

PMI readings are sequential and represent month-on-month expansion or contraction.

A private survey of Chinese factory activity is also due on Friday, and analysts polled by Reuters predict that the print will come in at 49.5.

— Abigail Ng

Japan’s industrial production rises more than expected

CNBC Pro: Is the Fed on the right track? Wall Street veteran Ed Yardeni says this is what it should do next

The U.S Federal Reserve announced yet another 75 basis point hike earlier this month, sending the federal funds rate up to a range of 3% to 3.25%. The central bank also signaled it may raise interest rates up to as high as 4.6% in 2023 to control inflation.

Ed Yardeni, the economist who coined the term “bond vigilantes,” gives his take as the Fed’s response to inflation comes under intense scrutiny.

Pro subscribers can read more here.

— Zavier Ong

Fed’s Loretta Mester says interest rates are not yet restrictive

Cleveland Federal Reserve President Loretta Mester said interest rates are not yet restrictive, and there’s more to be done to bring down inflation.

“Inflation is still at a 40 year high,” Mester told CNBC’s Steve Liesman during an appearance on “Squawk Box.” “So right now the conversation has to be we have to do, what we must do to get back to price stability, because we can’t have a healthy economy, we can’t have good labor markets over time, unless we get back to price stability.”

Mester said she’s probably “a little bit above the median path” among Fed officials when it comes raising interest rates, citing the persistence in inflation.

“We’re still not even in restrictive territory on the funds rate, so you’re right, we’ve moved the funds rate up 300 basis points this year, but look how high inflation is,” Mester said.

— Sarah Min

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Business

Wall Street ends busy post-summer session in the red

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  • ISM services sector data beats estimates
  • Bed Bath & Beyond shares sink after CFO’s death
  • Wall St coming off three straight week of declines
  • Dow down 0.55%, S&P 500 down 0.41%, Nasdaq down 0.74%

NEW YORK, Sept 6 (Reuters) – Wall Street’s main indexes closed lower on Tuesday, the first session after the U.S. Labor Day holiday and summer vacations, as traders assessed fresh economic data in volatile trading.

A survey from the Institute for Supply Management (ISM) showed the U.S. services industry picked up in August for the second straight month amid stronger order growth and employment, while supply bottlenecks and price pressures eased. read more

However, numbers from S&P Global showed the services sector Purchasing Managers’ Index fell short of flash estimates for August.

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A stronger-than-expected reading on the U.S. services sector fueled expectations that the Federal Reserve will keep raising interest rates to tame inflation.

“The Fed has relegated us to being very data dependent, so every piece of information that comes out investors are going to look not only at the absolute level, but try to infer what that means for when the Fed meets,” said Carol Schleif, deputy chief investment officer at BMO Family Office.

“One of the things that is disconcerting to investors is that there’s really little to propel markets either up solidly or down solidly,” she added.

Concerns over the supply of energy to Europe and how COVID-19 lockdowns will impact China’s economy also drove markets down on Tuesday, said Shawn Cruz, head trading strategist at TD Ameritrade. “A lot of uncertainty and volatility is not coming from the U.S.; it’s actually coming from overseas.”

The tech-heavy Nasdaq (.IXIC) suffered its seventh consecutive day of losses, its longest losing streak since November 2016.

Rate-sensitive shares of Amazon.com Inc (AMZN.O) and Microsoft Corp (MSFT.O) fell about 1% as benchmark U.S. Treasury yields rose to their highest levels since June. Apple Inc (AAPL.O), which will launch new iPhones next Wednesday, lost 0.8.

Traders see a 74% chance of a third consecutive 75-basis-point rate hike at the Fed’s policy meeting later this month, according to CME’s FedWatch Tool.

The focus will be on Fed Chair Jerome Powell’s speech on Thursday as well U.S. consumer price data next week for clues on the path of monetary policy.

Markets started September on a weak note, extending a slide that started at the end of August, as hawkish comments from Fed policymakers and data signaling U.S. economicmomentum raised fears of aggressive interest rate hikes.

The S&P is down nearly 18% so far this year, while the Nasdaq has shed over 26% as rising interest rates hurt megacap technology and growth stocks.

Among the major S&P sectors, energy (.SPNY) and communication services (.SPLRCL) were the worst performers, while defensive utilities (.SPLRCU) and real estate (.SPLRCR) rose.

The Dow Jones Industrial Average (.DJI) fell 173.14 points, or 0.55%, to 31,145.3; the S&P 500 (.SPX) lost 16.07 points, or 0.41%, to 3,908.19; and the Nasdaq Composite (.IXIC) dropped 85.96 points, or 0.74%, to 11,544.91.

The CBOE Volatility index (.VIX), known as Wall Street’s fear gauge, touched a near two-month high of 27.80 before closing at 26.91.

Bed Bath & Beyond Inc (BBBY.O) tumbled 18.4% after Chief Financial Officer Gustavo Arnal fell to his death from New York’s Tribeca skyscraper. read more

Digital World Acquisition Corp (DWAC.O) fell 11.4% after Reuters reported the blank-check acquisition firm that had agreed to merge with former U.S. President Donald Trump’s social media company failed to secure enough shareholder support for an extension to complete the deal.

Volume on U.S. exchanges was 10.71 billion shares, compared with the 10.46 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancers on the NYSE by a 2.46-to-1 ratio; on Nasdaq, a 2.12-to-1 ratio favored decliners.

The S&P 500 posted no new 52-week highs and 29 new lows; the Nasdaq Composite recorded 19 new highs and 317 new lows.

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Reporting by Carolina Mandl, in New York, and additional reporting by Sruthi Shankar and Ankika Biswas in Bengaluru; Editing by Saumyadeb Chakrabarty, Maju Samuel and Richard Chang

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Business

Stocks trade mixed; Caixin services PMI data

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The Tokyo Stock Exchange in Japan.

Noriko Hayashi | Bloomberg via Getty Images

Shares in the Asia-Pacific traded mixed on Monday as investors digest the results of a private survey on Chinese services sector activity.

Hong Kong’s Hang Seng index fell 1.29% in early trade, with the Hang Seng Tech index down more than 2%.

In Japan, the Nikkei 225 fell 0.21%, and the Topix index lost 0.17%.

The Shenzhen Component in mainland China dipped 0.46%, and the Shanghai Composite slipped 0.22%.

China’s Caixin Services Purchasing Managers’ Index came in at 55.0, compared with July’s print of 55.5.

In South Korea, the Kospi rose 0.3% while the Kosdaq fell 0.93%. The S&P/ASX 200 in Australia gained 0.24%.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.68% lower.

On Friday in the U.S., nonfarm payrolls for August rose 315,000, slightly below the Dow Jones estimate. Unemployment inched higher.

“Asset markets initially recovered as an uptick in the U.S. unemployment rate due to a higher participation rate was seen as a potential sign of easing inflationary pressures in the US labor market,” ANZ Research said in a Monday note.

“[However,] the improved mood didn’t last long, as news emerged that Gazprom is not planning on restarting gas flows through Nord Stream 1,” the note said.

The Group of Seven nations announced on Friday that it reached an agreement to put a cap on Russian oil prices.

“The lack of reaction in the global oil price suggests a degree of skepticism about the impact,” ANZ Research wrote.

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Business

Australia stocks fall 2%, China Caixin PMI ahead

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An employee works at the Tokyo Stock Exchange in Tokyo, Japan, on Jan. 13, 2022.

Toru Hanai | Bloomberg | Getty Images

Shares in the Asia-Pacific are trading lower Thursday as investors await the results of a private survey on China’s factory activity.

In Australia, the S&P/ASX 200 declined 1.98%, and the Australian dollar weakened to $0.6811.

Japan’s Nikkei 225 slipped 1.54%, and the Topix index dropped 1.3%.

The Kospi in South Korea shed 1.53% and the Kosdaq lost 0.9%.

Hong Kong’s Hang Seng index was 1.1% lower, and in mainland China, the Shanghai Composite was up 0.17% after opening lower, while the Shenzhen Component also up 0.56%.

MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 1.4%.

China’s Caixin/Markit manufacturing Purchasing Managers’ Index for August released Thursday showed the sector slipping into contraction this month.

This comes after official manufacturing PMI data released on Wednesday showed that factory activity shrank amid a recent rise in Covid infections, and the nation facing the worst heatwaves in decades.

Overnight in the U.S., major stock indexes rose earlier in the session, but closed lower for a fourth straight day.

The Dow Jones Industrial Average shed 280.44 points, or nearly 0.9%, to 31,510.43. The S&P 500 slipped roughly 0.8% to end the day at 3,955, and the Nasdaq Composite declined about 0.6% to 11,816.20.

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Business

China’s factory activity contracts unexpectedly in July as COVID flares up

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Employees work on the production line of vehicle components during a government-organised media tour to a factory of German engineering group Voith, following the coronavirus disease (COVID-19) outbreak, in Shanghai, China July 21, 2022. REUTERS/Aly Song

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  • China July official manufacturing PMI below forecast
  • July official services PMI grows at slower pace
  • COVID flare-ups, cooling global demand, property key risks
  • Big stimulus seen unlikely, govt omits mention of growth goal

BEIJING, July 31 (Reuters) – China’s factory activity contracted unexpectedly in July after bouncing back from COVID-19 lockdowns the month before, as fresh virus flare-ups and a darkening global outlook weighed on demand, a survey showed on Sunday.

The official manufacturing purchasing managers’ Index (PMI) fell to 49.0 in July from 50.2 in June, below the 50-point mark that separates contraction from growth, the National Bureau of Statistics (NBS) said.

Analysts polled by Reuters had expected it to improve to 50.4.

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“The level of economic prosperity in China has fallen, the foundation for recovery still needs consolidation,” NBS senior statistician Zhao Qinghe said in a statement on the bureau website.

Continued contraction in the oil, coal and metal smelting industries was one of the main factors pulling down the July manufacturing PMI, he said.

The reading was the lowest in three months, with sub-indexes for output, new orders and employment all contracting.

Chinese manufacturers continue to wrestle with high raw material prices, which are squeezing profit margins, as the export outlook remains clouded with fears of a global recession.

Weak demand has constrained recovery, Bruce Pang, chief economist and head of research at Jones Lang Lasalle Inc, said in a research note. “Q3 growth may face greater challenges than expected, as recovery is slow and fragile.”

The official non-manufacturing PMI in July fell to 53.8 from 54.7 in June. The official composite PMI, which includes manufacturing and services, fell to 52.5 from 54.1.

China’s economy barely grew in the second quarter amid widespread lockdowns, and top leaders recently signalled their strict zero-COVID policy would remain a top priority. read more

Policymakers are prepared to miss their GDP target of “around 5.5%” for this year, state media reported after a high-level meeting of the ruling Communist Party. read more

Beijing’s decision to drop mention of the growth target has doused speculation that the authorities would roll out massive stimulus measures, as they often have in previous downturns.

Capital Economics says that policy restraint, along with the constant threat of more lockdowns and weak consumer confidence, is likely to make China’s economic recovery more drawn-out.

FALTERING RECOVERY

After a rebound in June, the recovery in the world’s second-biggest economy has faltered as COVID flare-ups led to tightening curbs on activity in some cities, while the once mighty property market lurches from crisis to crisis.

Chinese manufacturers are also still wrestling with high raw material prices, which are squeezing profit margins, and the export outlook is being clouded by fears of a global recession.

China’s southern megacity of Shenzhen has vowed to “mobilise all resources” to curb a slowly spreading COVID outbreak, ordering strict implementation of testing and temperature checks, and lockdowns for COVID-hit buildings. read more

The port city of Tianjin, home to factories linked to Boeing (BA.N) and Volkswagen , and other areas tightened curbs this month to fight new outbreaks. read more

According to World Economics, the lockdown measures had some impact on 41% of Chinese companies in July, though its index of manufacturing business confidence rose significantly from 50.2 in June to 51.7 in July.

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Reporting by Beijing Newsroom; Editing by Himani Sarkar and William Mallard

Our Standards: The Thomson Reuters Trust Principles.

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Business

Oil drops $6 as recession fears deepen demand concerns

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A view of the Phillips 66 Company’s Los Angeles Refinery (foreground), which processes domestic & imported crude oil into gasoline, aviation and diesel fuels, and storage tanks for refined petroleum products at the Kinder Morgan Carson Terminal (background), at sunset in Carson, California, U.S., March 11, 2022. REUTERS/Bing Guan

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LONDON, July 5 (Reuters) – Oil prices dropped $6 on Tuesday as concerns about a possible global recession curtailing demand outweighed supply disruption fears, highlighted by an expected production cut in Norway.

Brent crude was down $6.65, or 5.9%, at $106.85 a barrel by 1344 GMT, and U.S. West Texas Intermediate (WTI) crude fell $5.65, or 5.2%, to $102.78 a barrel from Friday’s close. There was no WTI settlement on Monday because of a U.S. holiday.

Investors are becoming more concerned as the latest surge in gas and fuel prices adds to worries about recession.

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“Oil is still struggling to break out from its current recessionary malaise as the market pivots away from inflation to economic despair,” Stephen Innes of SPI Asset Management wrote.

In the euro zone, data showed business growth across the bloc slowed further last month, with forward-looking indicators suggesting the region could slip into decline this quarter as the cost of living crisis keeps consumers wary. read more

In South Korea, inflation hit a near 24-year high in June, adding to concerns about slowing economic growth and oil demand. read more

Supply concerns still linger, initially lifting WTI and Brent earlier in the session, amid worries about potential output disruption in Norway, where offshore workers began a strike. read more

The strike is expected to reduce oil and gas output by 89,000 barrels of oil equivalent per day (boepd), of which gas output makes up 27,500 boepd, Norwegian producer Equinor (EQNR.OL) has said.

Saudi Arabia, the world’s top oil exporter, raised August crude oil prices for Asian buyers to near record levels amid tight supply and robust demand. read more

Meanwhile, Russia’s former president Dmitry Medvedev said on Tuesday a reported proposal from Japan to cap the price of Russian oil at about half its current level would mean less oil on the market and could push prices above $300-$400 a barrel. read more

G7 leaders agreed last week to explore the feasibility of introducing temporary import price caps on Russian fossil fuels, including oil, in an attempt to limit resources to finance Moscow’s “special military operation” in Ukraine. read more

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Reporting by Bozorgmehr Sharafedin in London, Additioanl reporting by Florence Tan and Muyu Xu; Editing by Alexander Smith and Edmund Blair

Our Standards: The Thomson Reuters Trust Principles.

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