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Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Some upbeat economic news from China is cheering investors on the final day of June, boosting optimism that the world economy is turning the corner.
China’s factories grew at a slightly faster pace this month, according to China’s National Bureau of Statistics. Its Purchasing Manager’s Index has risen to 50.9 from 50.4 in May (anything over 50 indicates growth).
It’s the fourth month of (modest) growth in a row, as China emerged from the lockdown imposed to curb the spread of Covid-19 in January and February.
Chinese manufacturers reported that supply and demand are starting to pick up, leading to more new orders. However, new export orders are still down, meaning factories are still shedding jobs.
In a statement, NBS official Zhao Qinghe said there was still much uncertainty about the economic outlook, with small Chinese companies finding conditions particularly tough.
Tom Orlik
(@TomOrlik)China PMI comes in at 50.9 in June.
That’s a positive reading, but only just.
Based on the PMI’s, China’s recovery is steady but unspectacular. pic.twitter.com/tGU4t8PQfV
Services companies also strengthened, with the official non-manufacturing PMI rising to 54.4 in June from 53.6 in May. That’s the best reading of the year.
Julian Evans-Pritchard, senior China economist at Capital Economics, explain:
“The latest survey data suggest that economic growth accelerated in June thanks to a faster recovery in manufacturing and services, alongside continued strength in construction activity,
The recovery should remain robust in the coming months as strong infrastructure spending offsets external weakness.”
MacroMarketsDaily
(@macro_daily)ICYMI: There were further modest signs of recovery in China this month, with the official NBS non-manufacturing PMI rising to a 7-month high of 54.4 in June, while the manufacturing PMI edged higher to 50.9 pic.twitter.com/MZoBNNUd3Q
Following an unexpected surge in US home sales on Monday, this may bolster hopes that the world economy may be gingerly emerging from the coronavirus slump.
European stock markets are expected to rise a little this morning, at the end of one of the strongest quarters in decades.
By my reckoning, the FTSE 100 has gained almost 10% since the start of April – its best quarter since 2010. Europe’s Stoxx 600 has rallied by over 12% during the quarter – the best since 2015, while Wall Street has enjoyed its strongest gains since 1998.
Astonishing, really, given the world is still gripped by the Covid-19 pandemic. Clearly the unprecedented stimulus from central banks has reassured investors, even though a V-shaped recovery looks rather unlikely.
And most markets are still deep in the red for the year, due to the crash in February and March.
IGSquawk
(@IGSquawk)European Opening Calls:#FTSE 6235 +0.15%#DAX 12271 +0.32%#CAC 4959 +0.26%#AEX 562 +0.38%#MIB 19477 +0.15%#IBEX 7288 +0.13%#OMX 1676 +0.27%#STOXX 3238 +0.19%#IGOpeningCall
The agenda
- 10am BST: Eurozone core inflation for June – expected to remain at 0.8%
- 11am BST: Bank of England chief economist Andy Haldane speaks about the economic impact of Covid-19
- 1.30pm BST: Canadian GDP for April – expected to shrink by 13
- 2pm BST: S&P/Case-Shiller index of US home prices
- 5.30pm BST: US treasury secretary Steven Mnuchin and Fed chair Jay Powell appear before Congressional committee on financial services
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