Morning Brief – Mixed Data From China

Markets are in a mixed mood on Friday, following a big sell-off on Thursday-on-Thursday whereby apple’s stock sunk and the S&P500 was dragged down to a new yearly low.

Data earlier today from the world’s second-largest economy show that that the Chinese manufacturing PMI inched back into expansion with an above 50 reading.

However, the private Caixin manufacturing PMI remained in contraction, while the official Chinese services PMI fell to a 4-month low but was still in expansion as the construction sector activity gave the PMI a lift from the recent infrastructure policies.

Elsewhere, news that Japan is preparing another round of economic stimulus measures, the government said Friday, as rising prices and the plummeting yen squeeze the world’s third-largest economy.

Prime Minister Fumio Kishida told ministers to draft the relief package by the end of October so it can be passed by parliament this year, government spokesman Hirokazu Matsuno told reporters. The USDJPY pair is weaker intraday.

The British pound’s rally early Friday saw it briefly erase all of the losses it made since Kwasi Kwarteng began his speech last Friday announcing sweeping UK tax cuts. 

Sterling has had rallied more than 7% from its all-time low of $1.0350 set early Monday, climbing to 1.1200 today in early Asian trade, before selling-off by 100 pips.

The 1.1200 level is where the Chancellor of the Exchequer delivered his mini budget almost a week ago. Early this week the Bank of England’s bond purchases or QE helped stabilize gilts yields.

The gold price has started to find support in the correction of the recent bullish impulse but is back to trading near flat on the day around $1,660 after hitting a new yearly low this week.

The US dollar continued to ease despite bond yields rising and concerns rising interest rates will lead to a global recession. Month-end flows could be the culprit that is moving out of a heavily committed play by long positioning of late. The US 10-year note’s yield was last seen higher by some 0.37% to 3.7510%.

Oil prices were little changed in early trade on Friday but headed for their first weekly gain in five weeks, underpinned by a weaker US dollar and the possibility that OPEC+ may agree to cut crude output when it meets on October 5.

US West Texas Intermediate crude futures for November delivery rose 6 cents to $81.29 a barrel. Brent crude futures for November, which expire on Friday, inched up 2 cents to $88.51 a barrel.