Strong European PMI Data Revives Tapering Concerns
European stock markets move sideways after a largely positive session in Asia. The DAX tried to move higher in early trade but was knocked back by stronger than expected PMI readings, which revived tapering concerns and saw the EUR/USD moving higher again. The FTSE 100 meanwhile started lower but managed to recover losses. Eurozone peripherals underperformed marginally amid tapering concerns, but overall moves were very muted. In Asia, most markets closed higher after a positive session on Wall Street, with reports of progress on Trump’s tax overhaul and a positive Japanese PMI reading underpinning confidence. The Hang Seng continues to outperform on earnings optimism, while the ASX closed in the red. Oil prices are also slightly higher trading at USD 47.70 per barrel.
The American Petroleum Institute reported that U.S. crude oil inventories declined by3.595 million barrels in the latest week which was more than expected. Cushing Oklahoma inventories, where WTI crude oil is priced, were also down 462,000 barrels, for the week ended August 18. Gasoline inventories rose climbing 1.402 million barrels, while distillates were up 2.048 million barrels.
Eurozone August PMI Improved
Eurozone preliminary August PMI unexpectedly improved in the composite number. Individual readings were mixed, but the unexpected rise in the manufacturing reading to 57.4 from 56.6, still helped to compensate for the dip in the services reading to 54.9 from 55.4 and left the composite at 55.8, up from 55.7 in the previous month. Expectations had been for a steady to lower number. The ECB has already acknowledged that the recovery is strengthening, but remains firmly focused on still weak inflation and wage growth, arguing that the recovery still needs substantial monetary support.
Japan flash August manufacturing PMI rose to 3-month high of 52.8, up from 52.1. The index also remained above the 50 which designates expansion for the 12th consecutive month and rose to the highest since May. The preliminary index for new orders rose to 52.7 from a final 51.8 in July. If confirmed, that would mark a three-month high. The index for new export orders rose to 52.2 from 50.9 in the previous month. This comes on the heels of a better than expected Q2 GDP report, which shows that the world’s this largest economy is continuing to expand.
This article was originally posted on FX Empire
