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Australia preliminary Flash Judo Bank/S&P Global flash PMIs from Australia for July 2023
PMI Manufacturing 49.6 (prior 48.2) & Services 48.0 (prior 50.3)
Disappointing results with composite flash PMI 48.3 below 50.0 for the first time in half a year
Main contributor to the soft reading for July was a dip in business activity for the services sector, which had previously been staging a recovery in 2023
good news is that this gradual easing in activity will help take pressure off inflation and interest rates, but it will need to be sustained for the rest of 2023 and into 2024
results also suggest that the Australian economy remains on the ‘narrow path’ for a soft landing
economy is still growing with no signs of impending recession
employment index fell again in July but remains in expansion above 50. Labour demand across the economy remains solid and above a level that we would typically see when output and new orders were as soft as they have been recently. This suggests that labour hoarding continues as activity slows.
The concerning feature of the July Flash report is the price indicators which ticked higher in the month. The service sector inflation indicators remain elevated, consistent with inflation of around 4-5%, well above the RBA target of 2% to 3%. “The disinflationary trend evident in the PMI price indicators over the course of 2022 appears to have ceased. With the exception of manufactured good final prices, the inflation measures are at a level in July broadly similar to what we had at the start of 2023.Equity indices in the Asia-Pacific region were on the mixed side of things to begin the week with Japan’s Nikkei (+1.2%) the big winner and Hong Kong’s Hang Seng (-2.3%) the big loser.
—Equity Markets—
Japan’s Nikkei: +1.2%
Hong Kong’s Hang Seng: -2.3%
China’s Shanghai Composite: -0.1%
India’s Sensex: -0.5%
South Korea’s Kospi: +0.7%
Australia’s ASX All Ordinaries: -0.1%Worries about the property market, and specifically a debt refinancing effort by Country Garden, undercut the Hang Seng while the Nikkei rose in response to reports last Friday that the BOJ may not make any changes at this point to its yield curve control policy.
The BOJ has a policy meeting July 27-28. In related news, Kyodo reported that vice finance minister for international affairs Kanda said foreign exchange moves are being watched closely and that all options are available if there is excessive volatility in the yen. That view has helped the yen rebound some against the dollar after Friday’s big selloff. USD/JPY -0.4% to 141.15.
Japan’s preliminary July au Jibun Bank Japan Manufacturing PMI 49.4 (expected 49.8; last 49.8); Preliminary July au Jibun Bank of Japan Services PMI 53.9 (last 54.0)
Lots of speculation still surrounding potential China stimulus efforts. According to Xinhua, China’s Politburo reiterated vague plans to pursue proactive fiscal policy and monetary policy that is prudent.
Australia’s preliminary July Judo Bank Australia Manufacturing PMI 49.6 (last 48.2); preliminary July Judo Bank Australia Services PMI 48.0 (last 50.3)
Singapore’s June Core CPI 0.5% month-over-month (last 0.3%) and 4.5% year-over-year (expected 4.6%; last 5.1%)
Major European indices are on the softer side of things on Monday, showing lackluster form after a round of preliminary readings for July manufacturing and services sector activity showed continued weakening
STOXX Europe 600: -0.2%
Germany’s DAX: -0.1%
U.K.’s FTSE 100: -0.1%
France’s CAC 40: -0.5%
Italy’s FTSE MIB: -0.1%
Spain’s IBEX 35: -0.7%Spain’s IBEX 35 (-0.7%) is the main laggard after national elections this weekend saw the conservative Popular Party win the most votes, but not win enough seats to form a government.
Eurozone’s preliminary July HCOB Eurozone Manufacturing PMI 42.7 (expected 43.5; last 43.4); preliminary July HCOB Eurozone Services PMI 51.1 (expected 51.5; last 52.0); and preliminary July S&P Global Composite PMI 48.9 (expected 49.7; last 49.9)
Germany’s preliminary July HCOB Germany Manufacturing PMI 38.8 (expected 41.0; last 40.6); preliminary July HCOB Germany Services PMI 52.0 (expected 53.1; last 54.1); and preliminary July HCOB Germany Composite PMI 48.3 (expected 50.3; last 50.6)
UK’s Preliminary July S&P Global/CIPS UK Manufacturing PMI 45.0 (expected 46.1; last 46.5); preliminary July S&P Global/CIPS UK Services PMI 51.5 (expected 53.0; last 53.7); and preliminary July S&P Global/CIPS UK Composite PMI 50.7 (expected 52.4; last 52.8)
France’s preliminary July HCOB Manufacturing PMI 44.5 (expected 46.0; last 46.0); preliminary July HCOB Services PMI 47.4 (expected 48.4; last 48.0); and preliminary July HCOB France Composite PMI 46.6 (expected 47.8; last 47.2)Spain’s PPI -8.1% year-over-year (expected -10.2%; last -6.8%)
FT reports that economists think the ECB could accelerate to its quantitative tightening efforts alongside raising interest rates.
AMC (AMC 6.03, +1.63, +37.1%): was blocked by a Delaware judge from converting its APE units into common stock; aiming to renew stock conversion plan, according to Bloomberg
Tesla (TSLA 256.28, -3.71, -1.7%): downgraded to Neutral from Buy at UBS
Netflix (NFLX 427.00, -0.50, -0.1%): upgraded to Outperform from Neutral at Baird and raised its price target from $160 to $500
Domino’s Pizza (DPZ 383.30, -2.14, -0.6%): beats by $0.02, misses on revsAlnylam Pharma (ALNY 203.97, +3.90, +2.0%): announces partnership with Roche (RHHBY) to co-develop and co-commercialize Zilebesiran
Kodiak Sciences (KOD 3.51, -3.78, -51.9%): announces topline results from its Phase 3 studies of Tarcocimab Tedromer in Neovascular Age-Related Macular Degeneration and Diabetic Macular Edema and provides update on tarcocimab development program
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