Today’s Stock Exchanges, May 31st. China holds back, manufacturing at five-month lows: weak price lists
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A weak day is announced for the stock exchanges. The slowdown in the Chinese PMI for the manufacturing sector weighs on the markets, more intense than expected: with 48.8 points, the PMI indicator it has dropped to its lowest level since last December (below 50 indicates a recession). The service sector indicator was also disappointing, however well above the expansion line, not 54.5 points. The relief led the Asian stock exchanges to close at their lowest levels for over two months, with Hong Kong updating its deficit from January to 24% (almost -3% today alone). Even the offshore yuan takes note: six-month lows against the dollar. Eyes always on US debt ceiling: the White House-Republican agreement is expected to be passed in the House, then it will be up to the Senate where there may also be resistance from the GOP (there has also been talk of a possible removal of the speaker McCarthy). Objective: to close by Monday to avoid default.
Musk-China, meeting on innovative cars
Tesla CEO Elon Musk and China’s Industry Minister Jin Zhuanglong held talks on “new energy vehicles,” China’s Ministry of Industry and Information Technology said in Beijing. The two “exchanged views on the development of new energy vehicles and smart connected vehicles,” the ministry said.
Asian stocks down sharply
Asian stocks fell sharply after the mid-session, reflecting disappointing data on manufacturing activity in China in May, and pending US Congressional approval of the debt deal. In Hong Kong, the Hang Seng index lost 2.81%, while in China, the Shanghai Composite Index lost 0.94% and the Shenzhen Composite Index on China’s second largest stock exchange showed -1.11%. Seoul and Taiwan hold, with modest declines.
Weak futures on Western stock exchanges
Futures on US stock market indices down sharply on the markets. The Dow Jones contract dropped 0.43%, while the S&P 500 lost 0.30% and the Nasdaq posted -0.25%. Clearly negative signals also for the European stock exchanges: the Dax of Frankfurt loses 0.49%, the London Ftse 100 loses 0.53%, the Euro Stoxx 50 shows -0.49%.
Chinese manufacturing in retreat
Manufacturing activity in China deteriorates in May, reducing recovery ambitions after the December removal of the anti-Covid restrictions: the PMI index unexpectedly fell to 48.8 (to its lowest level in the last 5 months), accentuating the contraction to 49.2 in April and against expectations at 49.4. The figure, released by the National Statistics Office, signaled the second consecutive monthly contraction in production activities due to weak domestic and global demand. Surprisingly, even the non-manufacturing PMI slowed down: 54.5 on expectations at 55.2 and 56.4 in April. Services have so far supported the economic recovery.
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