Chinese manufacturing data due today will set the tone for the week. The underperformance of the Australian market can be attributed to a number of factors, interest rate concerns, political tension in Ukraine, prospect of less stimulus in the US and growth worries around China. Chinese manufacturing PMI has contracted for two straight months, and a number of economic indicators suggest that its economy has continued to decelerate. Industrial production has slowed from 10.4% in August to 8.6% in February, and fixed asset investment and retail sales have also eased. With March manufacturing data due today the market will be hoping for a positive start to the trading week. March PMI tipped to rise to 48.7 points from 48.5 points. Improved Chinese data should give the Australian mining stocks a boost, and set the tone for the rest of the week. I will be watching these numbers carefully.
Dean Honan
James, I think the market was looking for a positive start after a few poor results, and even though PMI data was below expectations, it was still 'average' enough to warrant some buying. The market is fixated on Ukraine and Russia tensions, but missing the major story unfolding in China - a broad based slow down as best case scenario, and at a worst a major correction
Dean Honan
Alex, it's concerning, it's now fallen for a 5th month in a row, and usually this month has a good lead in from Chinese new year. I believe the government will step in soon, they don't take kindly to weak data.
Canaccord Colts
Good market commentary Dean. What did you make of the HSBC flash China PMI? Another sub-50 month.
James Marlay
Market has looked at those figures like a bit of a speed bump. A short sell off following the initial release and things have pushed on since then. Perhaps investors think that the China relationship is being diluted by positive outlooks in developed economies such as the US. Or expectations broadly are already lower than consensus forecasts?