U.S. Stocks Flat After Mixed Global Data

bieAsian stocks fell on Wednesday and U.S. stocks are flat after a mixed bag of global data was released today which follows yesterday’s stock market retreat that saw major U.S. stock indexes falling over 1 percent.

Latest data today from China shows that China’s factory activity touched a 6 1/2 year low in September, according to a preliminary survey.

The Caixin/Markit manufacturing purchasing manager’s index (PMI) contracted to 47 in September which is below August’s 47.3.

A reading below 50 represents economic contraction.

“The decline indicates the nation’s manufacturing industry has reached a crucial stage in the structural transformation process. Overall, the fundamentals are good. The principle reason for the weakening of manufacturing is tied to previous changes in factors related to external demand and prices” said Dr. He Fan, Chief Economist at Caixin Insight Group.

“Fiscal expenditures surged in August, pointing to stronger government efforts on the fiscal policy front” Dr. He Fan said in a released statement.

European stocks are rallying higher and the euro is up over the dollar following the release of Markit survey data that showed stable growth in the 19 member euro area at the end of the third quarter.

Although Markit’s euro area PMI slipped from 54.3 in August to 53.9 in September, the index remains mostly in line with recent readings over the past 8 months and pushed the 3rd quarter average to the highest level seen since the 2nd quarter of 2011.

“The September PMI surveys indicate a further steady expansion of the Eurozone economy, but there remains a worrying failure of growth to accelerate to a pace sufficient to generate either higher inflation or strong job creation” said Chris Williamson, Chief Economist at Markit.

“The survey data indicate that the Eurozone economy expanded 0.4 percent in the third quarter, in line with the second quarter. This is, however, below what’s generally regarded as its long term potential growth rate and puts the economy on course to grow by just 1.6 percent this year” Williamson said in a statement.

-John Schweitzer

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