In the US, ISM manufacturing index data for August is due out
Market movers today
-
In the euro area, manufacturing PMIs for Spain and Italy will be released today. The flash estimate for the euro area showed a slight decline in manufacturing PMI to 51.8 from 52.0 but overall the PMIs indicate that the euro area is on a steady growth path in Q3. As the French and German manufacturing PMI both saw a slight decline in line with the euro area PMI, we expect a very similar small decline in the Italian and Spanish manufacturing PMI.
-
Also, look out for the PMI manufacturing index for the UK although the service sector remains the most important sector for the UK economy.
-
In the US, ISM manufacturing index data for August is due out. We look for a decline to 51.8 in August, due to the decline in the preliminary Markit PMI manufacturing and weak regional indices. We think the manufacturing cycle has turned since the lows of early 2016 but also that an ISM manufacturing index above 52 is probably too high in the current situation.
-
In the Scandies, Norwegian and Swedish PMIs are also due for release. Also, retail sales data for July in Norway are due.
Selected market news
It is now September, marking the first trading day of Q3. Looking at the Asian stock market, the picture is rather mixed with Japan stocks up and Chinese stocks down. Yesterday, the oil price fell further and Brent oil is currently trading just above USD47 per barrel. Today could be a quiet day despite many data releases as we are waiting for the non-farm tomorrow. Yesterday's ADP report was decent showing employment rose 177,000 in August although it is not always the best indicator. A strong report would most likely increase the expectations of a Fed hike later this year.
During the night, Chinese PMIs came out better than expected. The official manufacturing PMI in August rose to 50.4 in August from 49.9 in July, the highest level in almost two years. Non-manufacturing PMI fell slightly from 53.9 in July to 53.5 in August. The private Caixin PMI manufacturing index fell from 50.6 in July to 50.0 in August. The index rose sharply in July so it was expected that it would come down again. Overall, it was encouraging that the official PMI manufacturing index recovered in August and is back above 50 indicating higher economic activity. That said, we still look for the Chinese economy to muddle through in H2, with construction activity still pulling up while fading fiscal stimulus is expected to weigh on activity rest of the year.
The Republican candidate Donald Trump repeated his tough stance on immigration in his speech yesterday, saying that all illegal immigrants are ‘subject to deportation'. He also repeated that he will build a wall between US/Mexico, which he wants Mexico to pay for.
Author
Danske Research Team
Danske Bank A/S
Research is part of Danske Bank Markets and operate as Danske Bank's research department. The department monitors financial markets and economic trends of relevance to Danske Bank Markets and its clients.
