The UK manufacturing PMI will also be released

Market movers today

• In Europe focus will be on manufacturing PMIs for March. In the euro area the most interesting will be the fast estimates for Italy’s and Spain’s. In both cases we expect a slight improvement underscoring the recovery has become broad based with manufacturing activity gaining strength even in Italy. The UK manufacturing PMI will also be released but it is of secondary importance to the services PMI due for release next week.

• In the US the main event is the release of the ISM manufacturing index for March. The US manufacturing sector so far appears to have been mixed in March, with the Markit flash PMI showing a small increase to a healthy 55.3, while the regional manufacturing surveys have been weak on balance including yesterday’s Chicago PMI. We expect the ISM to take a small dip to 52.0 from 52.9 but we note that the Markit PMI has been a better indicator of manufacturing production lately than the ISM.

• In the US the ADP employment report for March could give a first indication of the non-farm payroll report on Friday, although its track-record on predicting nonfarm payrolls is mixed.

• For more on Scandi markets see page 2

Selected market news

The Lausanne nuclear negotiations between Iran and the P5+1 countries (the five permanent members of the UN Security Council + Germany) continued past the scheduled midnight deadline in an attempt to finalise a text later today. While a comprehensive deal - to overturn economic sanctions made against Iran in exchange for curbs on Iran’s aggressive nuclear programme - now seems less likely, several of the negotiators have signalled that agreements on major points of discussion have been reached. The two remaining major points of discussion seem to be 1) the lifting of UNlevel sanctions and 2) Iranian uranium-enrichment research. The outlook of the Iranian oil supply hitting global markets has weighed on the oil price this morning with the price of Brent Crude again moving below USD55/bbl.

Chinese March PMI figures released this morning surprised markets on the upside. At 50.1 the official National Bureau of Statistics’ (NBS) manufacturing PMI rebounded from the February release suggesting that stimulus efforts have supported an expansion in Chinese manufacturing amid new export orders falling to the lowest level in more than a year. While the NBS non-manufacturing PMI declined a little to 53.7 (from 53.9), the final print of the private HSBC PMI was also revised higher to 49.6.

In Japan the quarterly Tankan survey surprised heavily on the downside. The large manufacturers see business conditions weaken and plan to cut capital expenditures by 1.2% in the fiscal year through March 2016. The release highlights the Japanese economy’s struggle to recover and has sent both the Nikkei and USD/JPY lower this morning.