UK stocks are expected to open slightly higher today amid concerns that China could decide against easing its monetary policy despite the past weekend’s disappointing manufacturing data. The FTSE 100 index is set to open at 5,707, down four points from Friday’s close.
HSBC today reported that its China purchasing managers index (PMI) dropped to 47.6 in August from 49.3 in the previous month, hitting the lowest level in over three years.
On Saturday, China said its official PMI index declined to 49.2 in August, slipping below the 50 mark – which indicated a contraction in manufacturing activity – for the first time this year.
“At face value this data would suggest it is more likely the PBoC will act to ease policy in order to stimulate growth,” said analyst at forex.com Chris Tedder.
“However, there were reports out of China earlier today that suggested Beijing would not be loosening monetary policy in the near-term.
“This is not entirely surprising since the manufacturing data alone isn’t enough to justify policy action and the PBoC is already undertaking a form of stimulus by selling record amounts of reverse repos.”
Later today, investors in Europe will have EU PMI data to digest.
In Asia, Japan’s Nikkei 225 index stood 7.5 points (0.1 percent) higher at 8,847 late in the session and China’s Shanghai Composite Index rose 13.5 points (0.65 percent) to 2,061.