Chinese PMI up
The Chinese PMI index rose to 49,7 pts. from 48,8 pts. in January. Even though this is the seventh of out of last eight months when the index was below 50 mark (indicating a slowdown), the index was also the highest since October and might have calmed those fearing a deeper slowdown in a near future. Notice, that at this point we have improving data and the monetary policy being relaxed in all major places around the globe! One cannot have a better combination for a risk-driven assets.
Keep in mind, that this rally might be on borrowed time though. Pumping up liquidity when the economy is growing encourages risk-taking, probably beyond sound limits. One (already present) consequence is a rise in commodities’ prices. If the price of oil continues to rise at a recent pace, the global economy might be hurt sooner (with Europe on top of the list) than some will notice a recovery.
…but German down
Flash PMIs in Germany disappointed though – both industrial and services indices were lower than expected and lower than in January; the doesn’t deny a scenario of recovery in the euro zone but suggest the path will be rocky
Elections in Greece on 8th of April
There are rumors that elections in Greece might be delayed by two or three weeks but for now the date is April 8th. In fact, the sooner the better as a short campaign reduces a risk of populist parties gaining ground and rejecting the just-sealed deal. The campaign is definitely the time to watch developments on the Greek streets.
On the charts:
S&P500 futures (H4) – an attempt from the bears to move down the triangle has been stopped by the Chinese PMI; the index may easily crawl to ’11 highs (1373 points) within the formation
COPPER (H4) – yesterday we pointed out that bulls were trying to move out from the downward corrective channel; they indeed succeeded and the bullish Chinese PMI may fuel a rally back towards Feb’ highs of 8737 USD
OIL (Daily) – even though there are hopes that a confrontation between Iran and the US will not materialize, supplies have been disrupted elsewhere – namely in Sudan (which exports to China); that might encourage bulls, especially that they’ve just managed to cross a key 120 USD resistance; the closest target is at 126,75 USD (’11 highs) but the technical target resulting from the previous downward channel is as high as 133,30 USD per barrel
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Przemysław Kwiecień PhD, Chief Economist |
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