LONDON: UK manufacturing flatlines, China struggles and UK rebounds
Time for a summary after a raft of manufacturing reports from around the world.
In the US, the Markit PMI was revised higher but the Institute for Supply Management’s (ISM) index of US factory activity suggested growth almost ground to a standstill last month.
Employment in the sector fell, according to the ISM survey, prompting some expectations of a gloomy picture when the closely watched non-farm payrolls report on the US labour market is published on Friday. With markets seizing on downbeat news as positive for shares, because it is seen cutting the chances of a US rate hike in December, Wall Street extended gains after the manufacturing report.
October was a mixed month overall for global manufacturing. China’s malaise continued, with activity shrinking for the eighth month in a row. Economists say it means Beijing may need to cut interest rates again soon, to prop up demand.
The UK smashed forecasts, with growth hitting its fastest rate in 16 months. Some analysts couldn’t quite believe the numbers, and argued that the underlying picture was less healthy.
The Eurozone had a rather subdued month – with growth in Germany and Spain slowing, and French factories posting little growth. Italy did surprisingly well, though.
Over in Athens, Greek bank shares jumped after stress tests showed they “only” need €14.4bn in new capital while students are protesting about education cuts.
Britain’s biggest bank, HSBC, noted a reduction in income from overdraft fees as it reported a rise in profits but drop in revenues. The bank also warned it may delay until next a year its decision on whether to remain based in London.
In other banking news, the UK’s high street banks are each in line for multimillion-pound windfalls from the sale of Visa Europe in a deal valuing the credit and debit card company at €21.2bn (£15bn)
And the Turkish stock market and lira have both jumped after Recep Tayyip Erdoğan’s party won last night’s general election. Investors welcomed the decisive result, even though it may lead to more discontent among opposition supporters.
