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US manufacturing activity picks up

The US manufacturing sector strengthened in September but nevertheless remained in contractionary territory. Wall Street saw in the better ISM Purchasing Managers’ Index (PMI) data a glimmer of hope and traded mixed to start the week, while European stocks were under pressure. Asia stocks also slumped in early Tuesday trading.

Shane Strowmatt, LGT
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5 minutes
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The Manufacturing ISM PMI for the US came in at 49% in September, up from August’s 47.6%. It was the eleventh consecutive month that the manufacturing sector remained in contraction as 50% separates contraction from expansion. The data suggests that the US economy as a whole expanded slightly after contracting for 9 months. A manufacturing PMI value over 48.7% generally indicates expansion of the overall economy. The manufacturing sector has proven to be more robust than many investors had expected earlier in the year, particularly given the aggressive interest rate hikes by the Federal Reserve. The strong data could give the Federal Reserve more room to continue with rate hikes after pausing last month.

In Europe, manufacturing activity appeared to be stuck deep in contraction. The Manufacturing PMI for the euro area fell to 43.4 in September from 43.5 in August. In the bloc’s largest economy, manufacturing activity was looking slightly better in September, but remained at a very low level. Manufacturing PMI in Germany came in at 39.6, up from 39.1 in August. The Euro Stoxx 50 and Germany’s DAX both ended Monday’s session down 0.9%.

In New York, stocks traded mixed on Monday, while tech stocks were able to make some gains. The Dow Jones Industrial lost 0.2% and the S&P 500 finished the week’s first trading session essentially flat. The tech-heavy Nasdaq-100 gained 0.8%.

In the Asia-Pacific region, stock markets were trading lower on Tuesday. Markets in mainland China were still closed for the Golden Week holiday but Hong Kong's Hang Seng Index led gains, trading down 3.3% after returning from a holiday on Monday. Shares of China Evergrande began trading again in Hong Kong, spiking as much as 42%. After taking steep losses, trading of shares of the property developer had been suspended. In Tokyo, the Nikkei 225 was down 2%. In Australia, the S&P/ASX 200 was trading down 1.3% after the Reserve Bank of Australia kept rates unchanged at 4.1%. In South Korea, markets were closed for a holiday.

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: Swiss Consumer Price Index (08:30), US JOLTS jobs report (16:00), weekly API oil report (22:30).


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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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