A varied selection of economic data from several parts of the globe did little to drive equity investors in one direction or the other on Thursday. As we move around the globe, we can start with good news. First quarter GDP readings for the US reported the economy grew at 2.6% at an annualised rate against expectations of 2.4%. Recent manufacturing data has been disappointing, that changed with a jump in February’s Chicago’s Manufacturing Purchasing Manager Survey rising back above 60. Despite this better than expected data, the Citi US economic surprise index continues to fall. This index reports how data comes in against expectations. Later Friday we get the Institute for Supply Management’s manufacturing PMI survey, hopes will be there for a positive surprise as well.
In contrast, China’s latest Purchasing Manager manufacturing data came in worse than expectations, and at 49.2 continues to suggest that the Chinese manufacturing base is contracting. The services data remained above 50. China’s latest new export orders PMI fell to a level last seen in 2008.
As for Europe, the latest inflation data reported that inflation within the euro area remains below the target of 2%. However, at 1.7% it did come in line with expectations. UK house prices rose 0.4% year on year according to the latest Nationwide survey.
The pound continues to rally, reaching a 7-month peak against the dollar, as the markets are further coming around to the view that Brexit will be delayed beyond the 29th of March. Possibly indefinitely?
We are now into the last month of the first quarter, and sentiment has improved from the start of the year. The MSCI world index is up over 10% from the beginning of the year. US equities a similar amount, even Europe has had a better start to the year. The laggard remains the UK up around 5%, partly as sterling has risen against the dollar. US Treasury yields have moved around a little but stay close to where they started the year. Gold has rallied as has the oil price from the start of the year, as the dollar has fallen against its peers.
Having quoted Goldilocks a few weeks ago in this blog, one is starting to read once again her name being whispered amongst the street of London.