Flash Global PMIs and Chance of Market Sentiment Change

Tomorrow could be the most important day of the week in terms of data releases. Not only is there the FOMC minutes, but most major countries report preliminary November PMIs as well. Given this is advance data, it’s the freshest information traders have access to. For that reason, if it doesn’t match expectations, it can shift the whole dynamics of the market.

In general, better than expected PMIs translate to more risk-on attitudes. Disappointing PMIs can renew interest in safe havens. With the market on somewhat uncertain ground of late, smaller moves in the data have been providing bigger swings in sentiment. The consensus is that the world is heading into a slowdown, so there is more of a chance that the markets could get an optimistic boost as PMIs are broadly expected to slide further into contraction.

Here are the key points to keep an eye on:

Australia

Australian Manufacturing PMI is expected to remain in expansion, though slip a bit to 52.2 from 52.7 prior. Services are expected to confirm that they are in contraction at 48.6, down from 49.3 prior. The prolonged Covid situation in China combined with passenger traffic caps in major airports is constraining the expected boost the economy typically gets in summer.

France

As the first of the large European countries to report, it’s likely to set the tone for the shared economy. It could also set the trajectory for the Euro for the rest of the week, since trading volumes are expected to be lower due to holidays in the US. French Manufacturing PMI is expected to slide further into contraction at 47.0 compared to 47.2 prior. Services PMI is expected to hold on to expansion at 50.6 compared to 51.7 prior.

Germany

The largest economy in Europe is expected to buck the trend a little and remain broadly stable within contraction. Services PMI are expected to tick down to 46.4 from 46.5 prior. Meanwhile Manufacturing PMI is expected to tick up by the same amount to 45.2 from 45.1 prior.

UK

The British economy has already been officially declared in a recession, and PMIs are naturally expected to fall further into contraction. Industry is expected to fare the worst but not as bad as Germany. Manufacturing PMIs are expected at 45.6 compared to 46.2 in October. Services PMI are expected to fall by the same amount to 48.0 from 48.8 prior.

US

In the world’s largest economy, the situation is expected to have an important change. Manufacturing expected to cross over the 50 from expansion to contraction by the bare minimum, likely to have a more psychological effect as both PMIs turn towards pessimism. Manufacturing PMI is expected to come in at 49.9 compared to 50.4 prior. Services PMI is expected to tick one decimal further into contraction at 47.7 from 47.6 prior.

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