Article / 03 July 2017 at 6:58 GMT

Morning Markets: Japan leading the way?



  • France: Manufacturing PMI (0750 GMT)
  • Germany: Manufacturing PMI (0755 GMT)
  • EU: Eurozone manufacturing PMI (0800 GMT)
  • UK: CIPS/Markit Manufacturing PMI (0830 GMT)
  • EU: Unemployment (0900 GMT)
  • US: ISM manufacturing report on business (1400 GMT)

The first trading day of the second half of the year 2017 started in Asia with shares increasing slightly in Japan after solid Asian gains in the year so far. However, this week might not see that much activity due to the US independence day holiday.

On the Continent, meanwhile, today's unemployment data will be essential for those looking to gauge the strength of the European economy. 

Recent data continue to support a positive outlook for Europe  and today’s update on unemployment is expected to fall in line with the optimistic trend of late and a nine-year-low is on the cards.

Economists are looking for a decline in the euro area’s jobless rate to 9.2% for May. That’s still high by developed-world standards – the US rate, for instance, is just 4.3%. But the downward trend is a telling sign and today’s update is on track to reaffirm that the economic recovery is poised to roll on.

“The upturn is broad-based, with the surveys signalling an acceleration of GDP growth in both France and Germany in the second quarter, as well as across the rest of the region as a whole, albeit with some loss of momentum seen across the board in June,” the chief business economist at the consultancy recently noted.

Another downtick in the hard data for jobless figures will strengthen the view that the rebound in economic activity will carry on through this year’s second half.

In the the US the important data today is the ISM Manufacturing Index. Manufacturing activity has downshifted this year, but today’s release is expected to confirm that a moderate rate of growth prevailed at the year’s midpoint.

The ISM is projected to tick up to 55.1 for last month’s reading, fractionally above May’s 54.9, according to’s consensus forecast. A degree of scepticism hangs in the air, however, in the wake of the softer profile for the sector via the Manufacturing PMI. 

The flash estimate for June was considerably lower at 52.1. That’s still above the neutral 50 mark, but the PMI data suggests that manufacturing activity isn’t as robust as the ISM data imply.

Market signals

Asian session

  • Investors struggled to find direction after only modest gains on Wall St on Friday
  • The Bank of Japan Tankan survey showed a rebound to 17, up from 12 in March
  • The survey indicated there's a welcome rebound in business confidence in Japan
  • Japan's manufacturing PMI came 52.4 for June, just above the flash reading of 52
  • The Nikkei 225 was up 0.26% to  20,085.47 at 0504 GMT
  • Hong Kong launched Bond Connect today, for sales of China bonds overseas
  • The move opens up China's $9 trillion bond market to international investors
  • The Hang Seng was up by a slim 0.06% to 25,779.07 at 0524 GMT
  • China's Caixin PMI edged higher to 50.4 in June, in a welcome sign of expansion
  • The Shanghai Composite was down 0.10% to 3,189.12 at 0525 GMT
  • Australia's S&P/ASX200 lost ground, adding to last week's heavy losses
  • The S&P/ASX200 was down 0.48% to 5,694.00 at 0526 GMT
  • Wall St closes early today, as markets prepare for the July 4 holiday tomorrow

Forex ahead

  • USD edged higher against the yen; it was worth ¥112.5560 at 0450 GMT
  • The rising AUD has fallen short of resistance at 0.77; it was worth 0.7672 at 0449 GMT
  • The RBA statement due out on Tuesday is likely to impact the Aussie dollar

From the Floor

Sticking together. „There is this general market noise that we are seeing coordinated central bank message that they are moving in the tightening direction,“ says John Hardy.

Energizing stocks. „Energy stocks have gone done to levels where there could be some opportunities in the long run,“ says Peter Garnry.

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

There are signs that the strong US and UK manufacturing sectors are wavering if still above the norm, but for the UK a rising GBP is not helping, says James Picerno

Monetary policy muddle

ECB president Mario Draghi is hawkish, but the BoE's Mark Carney doesn't seem to know whether rates should rise or fall, says Kay Van-Petersen in his Macro Monday update.

All eyes on NFP

This week is off to a slow start with US markets closed on Monday afternoon and Tuesday, but Friday’s US jobs data may liven things up, writes the team at Saxo Capital Markets Australia.

Is Carnival  cruising?

Cruise operator Carnival is expected to report a 3% year-on-year dip in EPS and a 5% increase in revenue when it reports first-half results on Monday, writes Peter Garnry in a preview.

Commodities rally
The Bloomberg Commodity index rose for the first time in six weeks, with gains across most sectors except precious metals, but funds have cut their exposure sharply, writes Ole Hansen.

Japan economy

Monday's macroeconomic releases include Japan's Tankan survey and manufacturing PMI (both released already), and PMI data from several other countries. Image: Shutterstock

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