Market update: Upbeat Chinese manufacturing data and US Syria military action delay lifts markets – 02.09.2013

Source: Henderson Global Investors

US stocks fell last Friday ahead of the Labour Day weekend and owing to uncertainty about possible military action in Syria. The Dow Jones lost 0.2%, Nasdaq was down 0.8% and the S&P fell 0.3%. In addition, less positive US data included July consumer spending, which gained just 0.1%, falling short of analyst expectations for a 0.3% rise. The University of Michigan/Thomson Reuters Consumer Confidence Index also disappointed, falling from 85.1 a month ago to a four-month low of 82.1 in August.

European markets appear to be more bullish this morning. The FTSE Eurofirst 300 is up 1.7% and the FTSE 100 is up 1.5% at the time of writing. News that potential military action in Syria by the US has been delayed and surprisingly upbeat Chinese manufacturing output data are driving stocks higher. According to China’s National Bureau of Statistics, the manufacturing purchasing managers' index (PMI) rose to 51.0 in August as domestic demand improved. This compares with a lower reading of 50.3 in July (a reading above 50 suggests sector expansion). Meanwhile, British manufacturing received another boost when the Markit/CIPS PMI jumped to 57.2 in August, marking a fifth consecutive month of expansion.

In Asia Pacific, the Chinese data helped the Australian dollar to appreciate; the Hang Seng gained 2%, the Nikkei was up 1.4% but the Shanghai Composite closed flat.