China provided Western investors with a light at the end of the tunnel on Tuesday, showing it is possible to return to growth after the worst (hopefully) of the coronavirus crisis.
For February, China’s manufacturing and services PMIs had fallen to 35.7 and 29.6 respectively; for March, analysts were expecting a healthy bounce to 44.9 and 42.1. Instead, the sectors saw a remarkable swing back into expansion territory.
The manufacturing PMI came in at 52.0, the highest reading since covering August 2017. The services PMI, meanwhile, struck 52.3, taking it back to the kind of numbers that were seen prior to the outbreak.
Given that the rest of the week will see the European and US PMIs languishing at the concerning levels struck by China in February – the final readings could actually fall below the initial flash figures once the last week of March is taken into account – this rebound gave investors reason to be cautiously hopeful.
With Brent Crude up 1.5% and nearing $23 per barrel, helping BP (LON:BP) and Shell (LON:RDSa) 2.9% and 5.4% higher respectively, the FTSE added around 120 points. That took the UK index within touching distance of 5700, continuing the week’s efforts to claw back the sharp losses seen last Friday.
The DAX was even more emphatic this Tuesday, climbing 250 points to once again cross the 10000 mark. The CAC couldn’t match that enthusiasm but did still rise 1.6% to near 4450.
As for the Dow Jones, that’s currently only forecast to add 100 points when the bell rings on Wall Street. However, the US index did see a larger increase on Monday than its European peers – it finished up nearly 700 points – something that has contributed to their early perkiness. Nevertheless, that addition of 100 points would leave it only a smidge below last Friday’s highs.
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