23/02/2023

China’s official PMI fell to 35.7 in February, an all time low, and down from 50 in January. Efforts to contain the spread of the virus have meant that factories and other businesses have struggled to restart.

Asia stocks, US futures fall after China manufacturing data show contraction
Asia-Pacific equities started the week lower and US stock futures slipped after a gauge of Chinese factory activity fell to its lowest on record and central bankers noted the risks to economies from coronavirus.
The Topix in Japan was down 1 per cent, while Australia’s S&P/ASX 200 shed 2.8 per cent. South Korea’s Kospi was down 0.7 per cent. S&P 500 futures were down 1.3 per cent.
The falls follow the worst week for US stocks since 2008 as the spread of coronavirus outside China shook investors.
The yield on the 10-year US Treasury note was down 2 basis points at a new record low. Yields fall as prices rise. The Japanese yen, which is seen as a haven in times of uncertainty, was 0.4 per cent stronger at ¥107.70 to the dollar, while gold was flat.
China’s official PMI fell to 35.7 in February, an all time low, and down from 50 in January. A figure below 50 indicates a contraction in activity. Efforts to contain the spread of the virus have meant that factories and other businesses have struggled to restart as migrant workers have been required to undergo quarantine or have been unable to return to their place of work after the lunar new year holiday.
“The worse the economic data are right now, the more aggressive policy responses will be. Given the current development, we think an infrastructure stimulus is almost certain and the question is just how much,” said Wei Yao, chief Asia economist at Société Générale. She estimates the Chinese economy was running at half of its capacity last week.
US stocks pared losses before the close on Friday after Jay Powell, Federal Reserve chairman signalled the central bank was considering cutting interest rates, in response to the risk posed by the spread of coronavirus. The S&P 500 ended Friday down 0.8 per cent.