World stocks jump as China manufacturing PMI excite market

World stocks rose today after better-than-expected PMI numbers from China. Yesterday, data from China showed that the manufacturing activity rose to 50.5 in March, ending a downward trend that has plagued the market this year. The non-manufacturing PMI to 54.8, which was higher than the expected 54.1. Today, the PMI data from Caixin showed that the manufacturing PMI rose to 50.8, which was higher than the expected 49.9. In response to the news, China’s Shanghai and Hang Seng indices rose by 2.50% and 1.80% respectively. US futures showed that the Dow will gain more than 200 points at the open.

The sterling rose as the crisis in parliament continued. Last week, the parliament took over on Brexit and tabled 16 alternatives, which failed to garner the required majority. On Friday, the parliament also voted Theresa May’s proposal for the third time. This means that if no alternative is voted for, the country will leave the EU without a deal on April 12. Today, the members will attempt to pass more votes in parliament, but there is a low possibility of a breakthrough. Ahead of the voting, Theresa May asked the cabinet to vote for the indicative votes. This is after May’s own chief whip called the cabinet, ‘the worst example of ill discipline in cabinet in British political history’. Meanwhile, the PMI in the construction industry rose to 55.1 in March.

In the United States, the retail sales had an unexpected drop in February, raising further questions about the strength of the economy. The headline retail sales declined 0.2% on month-on-month in February, according to the commerce department. This was lower than the expected gain of 0.2%. It was also lower than the January’s growth of 0.7%. The core retail sales, which exclude the volatile food and energy products fell 0.2%, compared to the revised January’s gain of 0.8%. The decline in retails sales was caused by a drop in the decline of grocery and construction materials.

In Europe, the PMI data released by Markit were mixed. In Germany, the PMI continued the downward trend to 44.1, which was lower than February’s 47.6. In France and Italy, the data showed a PMI of 49.7 and 47.7 respectively. This was in line with the expectations. In Spain, the manufacturing PMI rose to 50.9, which was higher than the expected 49.5. Meanwhile, in the EU, the consumer prices rose by 1.4%, which was lower than the expected 1.5%.

GBP/USD

The GBP/USD pair rose to an intraday high of 1.3125, which was the highest level since last Friday. On the hourly chart, the price is along the middle line of the Bollinger Bands while the Average True Range (ATR) indicator was declining. The RSI has been moving in an upward trend. The pair could continue with the upward momentum, which could change depending on the outcome of the today’s Brexit drama.

AUD/USD

The AUD/USD pair moved up today after the impressive PMI data from China. This reading was important to Australia because China is responsible for a third of its exports. The pair reached a high of 0.7130, which was higher than the important resistance level shown below. Today’s high was close to the upper line of the Bollinger Bands while the On Balance Volumes has increased. The pair could continue to move up but it will likely be volatile in overnight trading because the RBA will deliver its interest rates decision.

EUR/USD

The EUR/USD pair was little moved in today’s trading after mixed economic data from Europe and United States. The pair remained closer to the Friday’s low of 1.1210. On the four-hour chart, the price is along the middle line of the Bollinger Bands while the Money Flow Index (MFI) has been gaining. The Accelerator indicator has also turned positive, although the momentum is a bit low. The price will likely resume the downward trend in the near-term.