Chinese data open the new year, the Caixin PMI increases

The private Caixin PMI for the Chinese economy released this morning increased to 50,8 points. which means that the activity of factories in the Middle Kingdom has increased, which is the result of, among others, more new orders. However, business confidence for 2024 remains subdued.

The last session on Wall Street ended with moderate declines. SP500 lost nearly 0,3%. and Nasdaq Composite over 0,5 percent. EUR / USD exchange rate makes a technical correction and drops to 1,1030. Since morning crude oil gains. WTI is higher by over 1,5%. and is approaching the ceiling of USD 73 per barrel.

Production under pressure from weak demand

The Caixin/S&P Global manufacturing PMI increased to 50,8 at the end of 2023 from 50,7 in November, the best result in 4 months. The given number exceeded analysts' forecasts, which fluctuated around the ceiling of 50,4. The manufacturing sector came under pressure from weak demand in 2023, while a slowdown in the real estate market, geopolitical factors and limited consumer spending weighed on the post-pandemic recovery.

Chinese politicians late last year committed to adapting their policies to support economic recovery in 2024. The market is waiting for further stimulus measures.

The Caixin manufacturing PMI contrasts with official results released on Sunday. The data showed that manufacturing activity in December contracted at a faster pace and by more than expected. Services, in turn, turned out to be slightly stronger than a month earlier and the index increased from 50,2 points. up to 50,4 points

Weaker demand caused factories to shut down reduced employment for the fourth month in a row and it was the highest pace since May. Although production costs continued to rise at the end of the year, the inflation rate in November fell to its lowest level in many months (-0,5%) and indicated a decline in prices. Not only are consumer prices falling, producer prices have also recently fallen year-on-year, as evidenced by the PPI index (-3%).

DAX ends the year on a positive note

On Wall Street, Friday's session ended with moderate declines. Of the three main benchmarks, it suffered the largest losses Nasdaq Composite falling by 0,56 percent. In Europe, we saw slight increases and the DAX ended the year with a result of +0,3%. The currency market traded calmly. The rate of the main currency pair fell for the second day in a row, reaching a low this morning at 1,1020.

Today they will be in the spotlight final PMI readings from Europe for the manufacturing sector and in the afternoon the United States will present similar data. This week, the most important publication will be Friday's report on the US labor market, which will show its condition in December.

Source: Łukasz Zembik, OANDA TMS Brokers