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Global September PMIs and Market Sentiment

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Global markets have returned to the downward trend, helped by a series of disappointing data over the last week. Although so far today there is apparently an attempt at a rally, that is likely more technical, related to the end of the quarter.

So, what could potentially turn market sentiment around? Better than anticipated PMIs are one possibility. Preliminary PMIs from the major countries were a disappointment, but there is a (small) chance that they might be revised higher and pleasantly surprise the markets. Of course if they come in as expected, it could be seen as confirmation of the general downward trend, and affirm the course.

What to look out for

With focus turning toward US employment figures at the end of the month, PMIs could set the stage for the whole week. Many of the results are expected very near the 50 level, which separates expansion and contraction, so there could be some shake ups if there is a miss or beat by just a few decimals.

Australia: Is expected to confirm the minimum increase in Manufacturing PMI to 53.9 from 53.8 in August. Remember that the RBA will be meeting later in the week, where another 50bps hike is expected.

Spain: Might set the tone for Europe, being the first to report from the shared economy. Manufacturing PMI is expected to take a significant dip to 48.5 from 49.9 in August.

Switzerland: Is expected to remain broadly upbeat, unlike the rest of the nations on the continent. But a bit of shadow is expected to fall on the Swiss luster, with an even bigger drop than Spain. Manufacturing PMI is expected at 54.5 down from 56.4 prior.

France: Is expected to confirm its fall back into contraction, with one of the worst results expected in the shared economy. It follows rising energy prices after the country had to idle nuclear power plants through the summer, so the drop might be somewhat temporary. Manufacturing PMI is forecast at 47.8 compared to 50.6 in August.

Germany: Is off on holiday, but will still report Manufacturing PMI, which is expected to be the same as the prelim at 48.3 compared to 49.1 in August.

UK: Despite the concerns over the budget, UK businesses are expected to actually increase their optimism. But, that might be because the Prelim number was from the survey done before Kwarteng’s announcement. That might be revised lower with the full survey completed after the budget announcement, but before the BOE’s intervention. Prelim Manufacturing PMI was 48.5 compared to 47.3 in August.

US: ISM Manufacturing PMI is expected to repeat the preliminary number and remain stable from the prior month at 52.8. Lower retail fuel prices over the period might have provided businesses with some more optimism, but several key companies radically cut their outlook. FedEx removing guidance ahead of an expected drop in deliveries spooked quite a few investors.

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