Manufacturing PMIs tumble once more

• Chinese manufacturing contracts further

• BoE stress tests provide late guidance

• UK manufacturing growth centred on large firms

Today sees the week start in earnest, with the first day of December bringing the initial wave of economic announcements, centred largely upon manufacturing PMIs out of China, the UK and the US. A very choppy start to the morning’s trading throughout Europe emphasises that with so many crucial releases this week, many are finding it difficult to know what side of the market to be on. Chinese delight at its inclusion within the IMF’s SDR currency basket was short-lived, with yet another contraction in its manufacturing sector. While the services sector expanded at a stronger rate, the fact is that globally companies and economies are suffering due to the falling demand for commodities, which is a symptom of the slowdown in manufacturing. With Chinese activity still in decline, there is likely to be further weakness in commodities in the future.

The BoE’s annual stress tests came out in favour of the industry once more, with banks surviving a hypothetical Chinese and emerging markets crash. However, RBS and Standard Chartered took the slack of the report, with both firms speculated to come close to failure due to weaknesses in their balance sheets. Unfortunately, the tests’ significance has come into question once more as they were based on 2014 data, with both firms having already taken the necessary steps to stave off such a crash prior to the report. UK manufacturing growth tumbled from an outstanding October, posting a November PMI reading of 52.7. While growth remains robust in UK manufacturing, the fact is that domestic demand is far outweighing export growth, while expansion in the sector is heavily weighted towards large firms, with SME’s growth lagging at best.

Ahead of the open we expect the Dow Jones to start 77 points higher, at 17,796.