Sino-US talks and PMI data lift sentiment
It’s been a strong start to trading on Wednesday and the US looks poised to follow, with futures up around half a percent ahead of the open.
The optimism has carried over from Asia where reports of progress in Sino-US trade talks and another strong Chinese PMI reading provided the fuel for Wednesday’s rally. We’ve spent so long fretting about a Chinese slowdown and the impact that a prolonged trade war could have that this week’s data releases have come as something of a surprise. The services PMI capping things off, coming in well above expectations at 54.4 – the highest since January 2018 – is more than welcome.
There’s also positive noises around the trade talks, with suggestions that the two sides are 90% there obviously providing encouragement. Obviously the last 10% was always likely to be the most challenging but we’re hearing nothing at the moment that suggests a deal is at risk, rather there’s a lot of optimism that it will get done. We’re just going to have to be a little patient.
Adding to the good news this morning has been the eurozone PMIs – it’s clearly one of those days – which have been beating expectations right, left and centre. Obviously, it’s worth noting that the worst of the PMIs have come from the manufacturing sector and as the numbers showed earlier in the week, this remains a major concern, but these numbers for the services sector are a positive point.
