Tag: PMI

  • China’s Caixin Services PMI surprisingly jumps to 51.4 in February vs. 50.8 expected

    China’s Caixin Services PMI surprisingly jumps to 51.4 in February vs. 50.8 expected


    China’s Services Purchasing Managers’ Index (PMI) unexpectedly firmed to 51.4 in February from 51 in January, the latest data published by Caixin showed Wednesday.

    The market consensus was for a 50.8 reading.

    AUD/USD reaction to China’s Services PMI

    At the time of writing, the AUD/USD pair is trading modestly flat on the day just above 0.6250, unimpressed by upbeat Chinese data.

    Australian Dollar FAQs

    One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.

    The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

    China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

    Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

    The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.

     



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  • Japan Manufacturing Sector Shrinks At Slower Pace

    Japan Manufacturing Sector Shrinks At Slower Pace


    Japan’s manufacturing activity continued to contract in February albeit at a slower pace, final survey data from S&P Global revealed on Monday.

    The au Jibun Bank manufacturing Purchasing Managers’ Index rose to 49.0 in February from 48.7 in January. The flash reading was 48.9.

    However, a reading below 50.0 indicates contraction. Operating conditions deteriorated for eighth straight month.

    Factory output fell for the sixth successive month during February but at a slower pace. New orders dropped further. Manufacturers cited demand retrenchment and weak client confidence as the key factors behind the fall.

    The subdued manufacturing performance was also reflected in a broad stagnation in employment levels and solid declines in purchasing activity and backlogs of work.

    Expectations towards the year-ahead outlook for output remained positive but eased from January to the lowest since June 2020.

    For comments and feedback contact: editorial@rttnews.com

    Economic News

    What parts of the world are seeing the best (and worst) economic performances lately? Click here to check out our Econ Scorecard and find out! See up-to-the-moment rankings for the best and worst performers in GDP, unemployment rate, inflation and much more.





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  • China NBS Manufacturing PMI registered at 50.2 above expectations (49.9) in February




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  • Japan Jibun Bank Services PMI came in at 53, above forecasts (52.7) in January



    Japan Jibun Bank Services PMI came in at 53, above forecasts (52.7) in January



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  • Dow Jones trims gains on Friday but still green for the week

    Dow Jones trims gains on Friday but still green for the week


    • The Dow Jones eased somwhat on Friday, testing into 44,300.
    • Despite a quiet end to the week, equities are poised for strong bullish closes.
    • US PMI data came in more mixed than expected, to little effect.

    The Dow Jones Industrial Average (DJIA) churned into a soft backpedal on Friday, testing down around 200 points on a slow trading day. The Dow Jones is capping off an otherwise firmly bullish week, with the index gaining around 2.3% from Monday’s opening bids. The DJIA has gained ground for the second week in a row, firmly hinting that the bull market is back after a six-week backslide.

    President Donald Trump stoked the flames of pro-equity sentiment this week by not instituting the day-one tariffs he promised on the campaign trail. He also announced this week that he would “demand” lower interest rates from the Federal Reserve (Fed) and plans to request a drop in oil prices from Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC).

    The S&P Global Purchasing Managers Index (PMI) survey results for January were even more mixed than analysts anticipated. According to an ambiguous number of survey respondents, businesses saw a better-than-expected improvement in forward-looking expectations for growth in the manufacturing sector. Still, services-based businesses are more despondent about future business conditions than most anticipated.

    January’s Manufacturing sector PMI rose to 50.1 from the previous month’s 49.4, surpassing the forecast of 49.6. The Services PMI for the same period shrank to 52.8 from 56.8, well below the expected 56.5, but still remains in positive territory overall, meaning purchasing managers who bothered to respond to the survey don’t expect much growth in the coming month, but don’t expect an outright contraction in business conditions either.

    Dow Jones news

    Despite some steeper losses in key overweighted stocks dragging the Dow slightly lower on Friday, the index itself is roughly on balance, with about half of the board’s listed equities still finding higher ground to wrap up the trading week. Walt Disney Co (DIS) rallied 1.8% to $113 per share, mainly on the back of expectations that past performance is indicative of future results after the entertainment monolith returned 24% over 2024 to people holding its shares. On the low side, Nvidia (NVDA) fell 2.5%, declining below $144 per share as investors fear the company may be doomed now that its run of seeing 100%-plus growth in annualized revenues may be over.

    Dow Jones price forecast

    The Dow Jones Industrial Average is once again knocking on record highs just above 45,000 set late last November. The DJIA initially declined 7.4% top-to-bottom in a six week backslide after posting the fresh record, but the wheels are back on the road as buyers continue to tilt into risk appetite.

    The Dow Jones has climbed 6.8% from January’s swing low into 41,730, testing the 44,500 region after closing in the green for all but one of the last nine consecutive trading sessions. The immediate barrier to fresh record highs will be 45,000 major handle itself, while a pullback to the 50-day Exponential Moving Average (EMA) near 43,275 could hamper bullish momentum.

    Dow Jones daily chart

    Dow Jones FAQs

    The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.

    Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.

    Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.

    There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.

     



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