Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Quite an interesting session yesterday. The type of stocks that used to mean something to the indexes i.e. the FedEx’s and Caterpillar’s of the world had warnings and/or weak updates but the market did not care. Further, after the bell Oracle reported sagging sales and EPS vs expectations, and the market did not care. Overnight European PMI continued to weaken, now at a four month lows DESPITE being at very low levels to begin with (remember 6 months ago the meme was “European data is so poor it simply can’t get worse”), and based on futures the market does not care. The main bit of decent news the past 24 hours is some good housing data out of Lennar, some decent Chinese PMI data (although their market is struggling again), and Russian aid apparently is another way out for Cyprus. The FOMC not making any changes I’d mark as a neutral because I don’t think anyone on Earth was expecting them to.
But we certainly live in some strange days when some global bellweathers stumble and it simply does not matter. U.S. and Japanese markets, which not coincidentally have the two central banks pressing the accelerator the hardest, continue to press upward with little relent despite any form of negative news globally.
China:
- HSBC’s flash China PMI, the first indicator of the strength of the country’s economic recovery without a Lunar New Year holiday distortion, rebounded to 51.7 in March – compared to forecasts for a rise to 50.8 – helped by an increase in new orders including export orders.
- Last month, the private sector index dropped to a four month low of 50.4. A reading above 50 indicates expanding activity and one below 50 signals contraction. During the Lunar New Year holidays – which fell in February this year – businesses close down for a two-week period, translating into a period of slower economic activity in the country.
- Sub-indexes measuring both input and output prices fell, indicating overcapacity upstream and soft demand. That’s in line with over a year of falling producer prices, although official data has shown some signs that the decline is bottoming out. An employment sub-index also softened.
Europe, with focus on Germany as always:
- Private business activity across the eurozone hit a four-month low in March as the downturn intensified, a leading growth indicator said on Thursday. The Purchasing Managers’ Index published by London-based Markit fell to 46.5 points in March against 47.9 in February, the flash estimate showed. Manufacturing output fell at the fastest rate since December, business activity in the service sector suffered the steepest fall since October, and new business fell at the sharpest rate in three months. France saw the steepest downturn in business activity since March 2009.
- Manufacturing activity in Germany in March contracted unexpectedly, falling to a three-month low, while service sector activity fell to a four-month low. In a report, market research group Markit said that its preliminary German manufacturing purchasing managers’ index fell to a seasonally adjusted 48.9 in March from a final reading of 50.3 in February. Analysts had expected the index to ease up to 50.5 in March. A reading above 50.0 on the index indicates industry expansion, below indicates contraction.
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