China’s official manufacturing index shot back into expansion in March, after falling sharply in February to the lowest levels seen since 2008. Last month, the industry was largely hit as the coronavirus epidemic brought work to a halt across most of the country.
The National Bureau of Statistics showed that the official manufacturing purchasing managers’ index rose to 52.0 during the month, following from February’s record low figure of 35.7. As a reminder, anything above the 50-point level is growth territory, anything below is contraction.
It is important to note, this one-off data reading does not mean that output is back to its pre-virus trend. The release more shows that the economic activity jumped modestly relative to February’s dismal showing, as factories get back to production.
What does this mean for the market?
The markets have initially reacted positively to this data from China. It has sparked some risk appetite, in terms of sentiment, which can be observed with stocks up globally.
In the currency markets, AUD and NZD have been benefitting, as remember, China is their biggest two-way trading partner. Gold prices have also been marginally lower in early trading on this, with JPY being a touch weaker across the board also (safe-havens).
Separately, do note, attributable to JPY weakness, with month-end, there are Japanese funds selling JPY and buying dollars, another reason why the greenback has been propped up recently in its technical correction.
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