Market movers today
In the euro area, PMIs are released. Manufacturing PMI has been on a rising trend since August 2016, getting close to the post-financial crisis peak of 59.0 in February 2011. In October, we expect manufacturing PMI to remain around the current level of 58.1, as the stronger euro may have started to affect new export orders adversely. After four straight months of decline, services PMI recovered in September to 55.8 and we believe services PMI will increase further in October to 56.2. Overall, the high PMIs support our expectation of robust growth for H2 in the euro area.
In the US, preliminary Markit PMIs for October are due. The service index shows that the service sector remains the main growth driver but we are puzzled about the large gap between ISM manufacturing and Markit PMI manufacturing and expect Markit PMI manufacturing to close the gap a little by increasing this month.
In China, the Congress of the Communist Party ends today with the new Standing Committee (SC) of the Politburo being presented Wednesday morning. Early news reports suggest Xi Jinping is choosing a moderate path in setting the new Standing Committee. South China Morning Post reports that there will be members from different factions, which in our view will bode well for political stability in China. It still remains unclear whether Xi Jinping will choose a successor.
To read the entire report Please click on the pdf File Below: