Hong Kong: The global manufacturing economy went for a health test on Monday, and the status report was not good, for the most part: the pulse reading is feeble, which points to a weak heart. In China, manufacturing activity slowed down, but worse news came out of Europe and the US, where the PMI data pointed to outright contraction. Data from India and Indonesia, however, pointed to surprising resilience, and markets this morning are reflecting this.
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As at 7.30 am IST, Nifty futures are up by one-half of 1 percent, and back above the 5300 mark. Markets elsewhere across the Asia-Pacific region too are mostly up — on the perverse expectation that the data was so bad on Monday that governments will step up with stimulus measures to prop up the economy. Hong Kong’s Hang Seng index is the outperformer of the morning, up in excess of 1 percent; but Tokyo and Shanghai too are up a tick, although Sydney is yo-yoing up and down ahead of an interest rate decision from the central bank.
Overnight, Wall Street finished about flat, but that doesn’t do justice to the rollercoaster of investor sentiment, which fell at the start on weak PMI data from Europe, and was compounded by shocking data from the US as well.
Clearly, the world economy is stumbling, with trade in particular the weak spot. Analysts are betting on interest rate cuts from the European Central Bank and from the Bank of Japan, and perhaps even a fiscal stimulus in China to prop up growth.
Back home, where PMI data surprised on the upside, analysts see a silver lining to the dark clouds of the weak data: crude oil prices are falling, which should tame imported inflation. However, the weakness of the monsoon — and early indications, which point to pockets of drought, are not very propitious — is a dampener on sentiment.
For today, however, we’ll likely see a positive start to the trading day.