The prospects of the world’s second largest economy received a boost following the release of a preliminary Purchasing Managers’ Index reading.
October’s flash PMI figure was compiled by Markit Economics and HSBC Holdings Plc and came in at 49.1, 1.2 higher than September’s final figure.
This result is also just 0.9 away from the 50 level which separates growth from contraction. The final Markit/HSBC figure is scheduled for release on November 1, as is a separate government-backed index.
Last month official figures showed an acceleration in China’s levels of production, investment and exports. This latest news proves a good indication that the Chinese economy may be stabilising and has the potential to imbue investors with confidence in global recovery in spite of the ongoing turmoil in Europe.
After the data release an economist with Mirae Asset Securities (HK) Ltd commented: ‘The flash PMI reading confirmed that China’s recovery is on track and no further monetary policy easing is warranted.’ Joy Yang went on to say ‘China will maintain the status quo in monetary policy for at least another six months, during which there will be no interest-rate cut and at most one cut in the required-reserve ratio.’
Although previously predicting a 0.25 per cent reduction economists now expect China to retain its current benchmark one-year lending rate of 6 per cent until the end of 2012.
With projections for Asian exports bolstered the Australian Dollar was likewise given a boost, rebounding from its recent run of losses.
As of 10:45 am
The Pound to Euro exchange rate is currently trading at 1.2362
The Pound to US Dollar exchange rate is currently trading at 1.6087
The Pound to Australian Dollar exchange rate is currently trading at 1.5652
The Euro to US Dollar exchange rate is currently trading at 1.3015
The Euro to Pound exchange rate is currently trading at 0.8087
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