A taste of things to come?
PMI data out of Japan and Australia came in below forecast in August. The Australian manufacturing PMI published by both Commonwealth Bank and Markit slowed to 51.3 from 51.6 in July, but the composite reading slumped below 50 to 49.5 due to a massive under-performance by the service sector.
The Japanese equivalent did manage a slight improvement from July, hitting 49.5 from 49.4, but it was below economists’ estimates of an improvement to 49.8. It still means that the manufacturing PMI has been below the 50 contraction/expansion threshold for the past seven months. Will this be a predictor of what is to come out of Europe and the US later today?
Equities consolidate yesterday’s surge
The positive momentum into yesterday’s close on Wall Street didn’t extend into Asia, with US indices declining between 0.19% and 0.30%. Hong Kong equities under-performed following street clashes between anti-government demonstrators and police last night, while the China50 index was caught up in contagion risk with losses of 0.62%, led by the property sector.
The mild risk-off mood was echoed in currency markets, with the yen advancing 0.16% versus the US dollar, 0.10% against the Euro and 0.35 versus the Aussie. USD/JPY is currently at 106.45, sitting just above the 100-hour moving average at 106.42.
USD/JPY Hourly Chart
Flash PMIs on tap
We get to see a whole string of Markit flash PMI readings for August later today. Germany’s manufacturing PMI is expected to show a deterioration to 43.0 from 43.2, which would be the lowest reading since 2012 and the 15th month below the 50 contraction/expansion threshold. The Euro-zone reading is expected to perform a little bit better, with a 46.2 print, though still below July’s 46.5 reading. That would also be the worst performance by the index since 2012.
Things looks slightly different across the pond, with the US Markit manufacturing PMI seen coming in at 50.5, up from July’s 50.4 print. Completing the US session we see the Kansas Fed manufacturing activity index for August, just as global central bankers arrive for their annual symposium at Jackson Hole (which continues through to Saturday).