Friday, 24 January 2014

Stocks fall as Chinese manufacturing contracts

Stocks fell on Thursday. The S&P 500 fell 0.9 percent, the STOXX Europe 600 fell 1.0 percent and the MSCI Emerging Markets Index fell 1.3 percent.

The weakness in stocks came as economic data on Thursday came out mixed.

Probably spooking investors most was a report from China showing that manufacturing activity there contracted in January. HSBC's preliminary reading of China's manufacturing PMI fell to 49.6 in January, the lowest since August.

In the US, manufacturing slowed in January as Markit's preliminary manufacturing PMI fell to 53.7 from 55.0 in December.

Slower growth in US manufacturing came after the economy as a whole had moderated in December. A report from the Chicago Federal Reserve on Thursday showed that its national activity index fell to +0.16 last month from +0.69 in November, dragging down the three-month average to +0.33 from +0.36.

However, US existing home sales rebounded in December, rising 1.0 percent, although data from the Federal Housing Finance Agency showed that home prices had risen just 0.1 percent in November, the smallest gain in almost two years.

The outlook for the US economy may also have weakened. The Conference Board reported on Thursday that its index of US leading indicators rose 0.1 percent in December after a 1.0 percent gain in the prior month.

However, the eurozone economy is looking more positive. Markit's flash eurozone composite PMI showed a jump to 53.2 in January from 52.1 in December. The manufacturing PMI rose to 53.9 from 52.7 while the services PMI rose to 51.9 from 51.0.

Also, a preliminary reading of the consumer confidence index for the euro area showed a rise to minus 11.7 in January from minus 13.5 in December.

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