China PMIBeatsWithBiggest 2-Month Surge InAlmost 4 Years
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Asian markets were quietly limping lower taking their lead from the US weakness on Friday but China’s flash PMI just printed above expectations and Japanese, Chinese, and US futures are getting a little lift. After priting below the official data for the last 5 months, the HSBC PMI is now firmly into ‘expansionary’ territory but perhaps the most ‘amazing’ thing is the last 2 monthshaveseentheequalbestimprovementinalmost 4 years, as it shifted from the worst contraction in a year to the best expansion in six months. It is very clear that the PBOC has realized whatwedescribedjust 2 weeksago – no leverage, no growth; and decided the free-money train is back on the rails (as illustratedbythe surge inhomeprices). Ofcourse, there’salwaysthequestionswhetheranyofthisis real – butbuyfirst, thinklaterseemstheorderofthenight.

Best 2-month gain since Oct 2010 (equal with the Sept 2010 change too)…

Most of Emerging Asia remains notably in the red though with Indonesia’s Jakarta Index (-1.2%) and India’s NIFTY futures (-1.25%) leading to the downside. Aussie’s ASX got a modest lift from the China PMI but that is fading. S&P futures gained 3 points on the news. Gold was legged down $10 or so on China’s open but is bouncing back a little.

Charts: Bloomberg

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