Market update: Markets lifted by stronger Chinese manufacturing data – 24.10.2013

Source: Henderson Global Investors

Wall Street ended in the red yesterday (S&P 500 -0.5%; Dow Jones -0.4%) after corporate earnings left investors in a downbeat mood. Caterpillar, the world’s largest heavy equipment manufacturer dropped 6.2% after missing analysts’ estimates for third quarter earnings, with weak demand from the mining industry weighing on its results. After the bell, AT&T and TripAdvisor also reported revenues that were slightly behind estimates. Elsewhere, the minutes of the Bank of England’s October Monetary Policy Committee Meeting were released. The committee’s decision to keep quantitative easing at £375bn was unanimous; the UK has been evidencing a robust recovery in activity, officials said, adding that that the slack in the economy was being eroded a little faster than they had forecast in August. This has raised the prospect of interest rates rising sooner than late 2016.

This morning, European markets have received a boost from data showing that China’s manufacturing sector had reached a seven-month high, helped by strong new orders; Markit/HSBC’s Purchasing Managers’ Index came in at 50.9 in October, up from 50.2 previously (a reading above 50 suggests sector expansion). There are still, however, lingering concerns about whether China’s central bank will intervene to cool its housing market – as a consequence short-term money rates have surged this week. It’s been a mixed day so far for earnings. Norwegian bank DNB reported higher than expected net profits, but Ericsson’s operating profits were below analysts’ forecasts. At the time of writing the FTSE Eurofirst 300 is 0.4% higher, while the FTSE 100 is up 0.3%.