China NBS Manufacturing PMI down for the month of July

According to the National Bureau Statistics of China, Manufacturing PMI in China unexpectedly came in at 49.9 in July of 2016 from 50.0 in June and slightly below market estimates. It was the first time the index fell below 50 since February, as output and new orders eased while new export orders shrank further. A contraction was also seen for: raw material in stock, employment, imports, finished in stock and orders in hand. Writing earlier today, Richard Grace, chief currency strategist at the Commonwealth Bank, suggested that the index was likely to fall below 50, signalling contraction, “because floods disrupted economic activity across large parts of China during the month”.

On another private PMI survey by Caixin/Markit, the result was more mixed. Its 50.6 reading was stronger than expected and the first expansion since February 2015, sparking hopes that some of the government's stimulus was starting to trickle down to smaller private firms which have been under greater stress than larger state-backed enterprises. But overall order growth was modest and export orders continued to fall. "The Caixin report tends to give more weight to light industry, whereas the official survey is skewed more toward heavy industries," said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, according to Caixin.

Market Snapshot



Equity Markets: Top performer: Japan Worst performer: Australia
Opening Wrap: The S&P 500 rose 0.16 percent to 2,173.6 and the Nasdaq Composite added 0.14 percent to 5,162.13. MSCI's broadest index of Asia-Pacific stocks outside Japan rose 1.1 percent, hitting its highest level in about a year. The Nikkei was up 0.05 percent at 16,578.09 points. The broader Topix was down 0.5 percent at 1,316.03 and the JPX-Nikkei Index 400 lost 0.4 percent to 11,830.29. China's blue-chip CSI300 index fell 1.1 percent, to 3,167.65 points, while the Shanghai Composite Index lost 1.3 percent, to 2,942.24 points. The Hang Seng index added 1.3 percent, to 22,178.73 points.

Currency Markets : Top performer: NZD/JPY. Worst performer: CAD/AUD
Opening Wrap: The dollar added 0.4 percent to 102.42 yen, while the euro rose 0.3 percent to 114.47 yen. The euro edged up 0.1 percent to $1.1176, while sterling added 0.2 percent to $1.3251, with investors focused on the Bank of England's decision on Thursday. The Australian dollar was slightly higher at $0.7608. The dollar index was up 0.1 percent at 95.578, crawling away from its Friday low of 95.384, its lowest since July 5.

Commodities Markets: Top performer: Gasoline Worst performer: Soybean Meal
Opening Wrap: Brent crude was at $43.72 per barrel, up 19 cents from its last close in July, when it lost 12 percent over the month. U.S. West Texas intermediate was at 41.76 per barrel, up 16 cents from July's last close. WTI fell 13 percent in July. Spot gold was nearly unchanged at $1,349.76 an ounce. Spot silver touched a 3-week high of $20.62 and was up 1.2 percent at $20.55. Platinum was up 0.3 percent at $1,146.5 an ounce, while palladium was down 0.4 percent at $707.

Treasuries: Top performer: UK Glit Worst performers: US T-Bond.
Opening Wrap: Benchmark 10-year Treasury notes were up 17/32 in price for a yield of 1.451 percent, the lowest since July 12. The two-year Treasury yield was down 5.5 basis points at 0.663 percent, its lowest in over a week.