Data released in China yesterday could add to investor concerns evidenced by a sell down of stocks on Friday night. Bond
markets also came under pressure. Currency markets remained calm, but gold edged higher and crude oil slid in signs of
deteriorating growth sentiment.
The data showed expansion slowing across the Chinese economy. The weaker reads on both manufacturing and
non-manufacturing activity surprised analysts and increases attention to today’s release of the Caixin manufacturing
PMI. The index is expected to show an expansionary reading of 52.6 for January, and any miss could add to selling
pressures.
The reading comes at the beginning of a huge week for economic releases. PMIs and ISMs for Japan, Europe and the US are
accompanied by select inflation reads in the first half of the week. Thursday brings US national accounts, including
durable goods orders, then employment numbers culminating in the non-farm payrolls on Friday night. Current share market
levels reflect a high degree of economic optimism for 2021. Evidence this week of a more sober economic outlook from
these leading indicators could bring substantial change.
The Australian dollar fell at this morning’s open after Western Australian re-instituted lockdown measures overnight.
The slip comes ahead of the Reserve Bank of Australia’s monthly meeting tomorrow. Economists forecast no change to the
cash rate or the three year bond yield target, both currently at 0.10%.