Geopolitics, Not PMI Data, Attracting Attention Today

June 5, 2017

Middle East tensions swelled further as Saudi Arabia, Bahrain, the U.A.E. and Egypt broke off diplomatic relations with Qatar.

The weekend terrorist attack in London took a new turn, as President Trump used the opportunity to reiterate several positions that he has taken.

  • He said the incident proved the need for the originally proposed 90-day travel ban against seven middle eastern states.
  • He criticized the mayor of London, Sadiq Khan for being soft on terrorism.
  • Noting that the attacks involved vehicles and knives, he ridiculed anti-gun proponents.
  • Typically, these tweets elicited broad condemnation from around the world and domestically.

Investors eagerly await former FBI Director Comey’s Thursday testimony before the Senate Intelligence Committee, hoping such might shed light on the timetable of what Trump knew and did regarding Russian attempts to destabilize the 2016 U.S. election.

Mexican President Nieto’s party won a state election, reducing political uncertainty in that country and lifting the peso more than 1% today.

Some markets in Europe especially Germany are closed for Whit Monday. New Zealand is shut in observance of the Queen’s birthday.

Share prices fell 0.6% in Australia and 0.5% in China. Japan’s Nikkei closed unchanged. Stocks in Europe have fallen 0.7% in France, 0.6% in Spain, and 0.3% in Great Britain.

WTI crude oil fell 0.5% to $47.41 per barrel. Industrial metal prices declined even more sharply, but Comex gold firmed 0.2% to $1,284.40 per barrel.

The ten-year British gilt yield edged up a basis point, while its Japanese counterpart is steady.

Service-sector and composite purchasing manager results from May surveys were announced for a slew of economies but exerted little impact on trading.

The PMI news from Euroland was good and consistent with second-quarter real GDP growth of around 0.7% not annualized. The Ezone composite PMI of 58.8 matched April’s six-year high. The French reading of 56.9 represents a 72-month high, while Italy and Spain saw their indices back off to 2-month lows but still robust values of 55.2 and 57.2. ¬†Euroland’s service-sector PMI of 56.3 was just 0.1-point under April’s 6-year high of 56.4.

Britain recorded an 8-month low composite PMI of 54.2, down from 56.2 the month before, and a service-sector PMI of 53.8, a 3-month low. The data suggest quarter GDP growth of about 0.5%.

Sweden’s services PMI fell 2.4 points to a 7-month low of 57.9.

Russia’s composite PMI reading (56.0) and services PMI (56.3) were each at 2-month highs with a particularly buoyant labor market component.

The Japanese composite purchasing managers index, 53.4, was at a 40-month high and benefited from a 0.8-point rise in its service-sector PMI to a 21-month high of 53.0.

China’s composite PMI rebounded to a 2-month high of 51.5 but was still reflected the second weakest growth since last September. The service-sector Chinese PMI climbed 1.3 points to a 4-month high of 52.8.

India’s services PMI jumped 2.0 points to 52.2, a 13-month high, and its composite PMI of 52.3 was the best since last October.

Private PMI readings in May for Hong Kong, Singapore and Lebanon respectively were at 50.5 (a 2-month low), 51.4 (a 3-month low) and 46.6 (a 7-month trough). A score of 50 separates expansion from contraction.

Non-oil PMIs in Saudi Arabia and the United Arab Emirates of 55.3 and 54.3 were comfortably above the 50 benchmark yet at six-month lows, indicating a slower rate of positive growth in each case. Egypt’s non-oil PMI dipped 0.1 point to 47.3, marking the twentieth sub-50 score in a row.

Standard Bank reported a 9-month low in South Africa’s manufacturing PMI to 50.2, indicating near stagnation.

Corporate profits in Australia posted 6.0% quarterly growth in 1Q17, which was less than half the prior quarter’s advance.

British new care registrations fell 8.5% on year in May. That was smaller than the 19.8% plunge in April but compares unfavorably with a 0.6% January-May on-year dip.

Turkish CPI and PPI inflation settled marginally back to 11.7% and 15.3%, respectively in May.

Revised U.S. first-quarter productivity and unit labor cost figures are due today. So are monthly factory orders and the non-manufacturing PMI survey results.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


Tags: , ,


Comments are closed.