Europe and US Gauges Chinese Economic Data

Europe and US Gauges Chinese Economic Data | FOMC and Apple Under Focus

European markets and US futures are trading higher on the back of more upbeat economic data out of Europe and China. France and Spain have taken the crown among their peers when it comes to manufacturing PMI data which was released today. Germany which is usually the leader and considered as the economic engine of the Eurozone has disappointed traders a little. The number came in at 54.4 while the forecast was for 56.5. This is mainly due to the uncertainty around the upcoming elections in Germany.

The second biggest economy in the world, China, which once was the biggest worry for investors, has started to show an improvement. The Chinese official purchasing manufacturing PMI index confirmed further expansion for the industrial sector during the month of January. The number came in well ahead of expectations and this confirmed that the growth is bouncing back. It came in at 51.3 compared to the forecast of 51.2.

By looking at the data, we know that bigger industrial firms are performing well, as the data released mainly provides us with a narrative about these firms. If you peel the layers off and look closely it is apparent that the service sector has picked up the slack from the construction sector.

However, we are still not completely out of woods as the possibility of a trade and currency war between the US and China is still very much on the cards. The new US president has pointed out several times how China has gained a more favourable hand by weakening its currency against the dollar and he is not going to let that happen anymore as the new administration is determined to change the landscape.

Moving away from China, the performance of the precious metal during the month of January certainly stands tall among other investments. The lack of competence in handling the significant matters has fuelled this rally. Moreover, traders are also starting to reconcile with the reality of Mr Trump carrying out the promises he made during his campaign. They are also dealing with a lack of information on fiscal spending, and tax cuts have faded the equity rally.

Over in the UK, the FTSE 100 performance has been brutal thanks to Theresa May who is pursuing a hard Brexit and making every effort to trigger Article 50 as planned.

Above all, investors are more focused on the vile performance of the US dollar, the downward momentum of which has picked up more steam as Trump's administration added the euro and Japanese yen to their list of currencies which have an unfair competitive advantage. His senior cabinet official attacked Germany position of being able to gain a competitive advantage due to the lower currency. Germany wasn't going to be reticent on this accusation and defended its position by pointing to the facts and urged Trump administration to dig deeper in order to get a better understanding.

Later on today, the focus will be towards the first day of the FOMC meeting. No surprises are expected at the end of the second day of this meeting. However, something of particular interest will be the tone of this meeting which will pave the way for future actions.

In company news, it is all about Apple and the stellar number it has produced. iPhone sales were solid and the number came in well ahead of expectations. The guidance for Q2 has gained consensus across the board, however, this will not be a deal breaker for investors. After their result, we are expecting more interest and more money to flow in while the firm continues to battle in more intense market competition environments such as China.

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