While the U.S. market has been doing little this month, the Shanghai index had its best day since October 2009 with a 4.3% gain overnight. This took it to 2150 (I created a blue line below in the chart to reflect that). Just like that it is up 10% off the 1950 bottom – whew. Nice call by Mr. Tom DeMark on this one. Here are the details from the flash PMI:
- Growth in China's vast manufacturing sector picked up in December, a preliminary private survey showed, with rises in areas such as new orders and employment underlining a brighter outlook for the economy in coming months. The HSBC flash purchasing managers' index for December rose to 50.9, a 14-month high and the fifth straight monthly gain. A figure above 50 indicates that growth is accelerating, while one below 50 shows slowing growth.
- Improving conditions are primarily driven by domestic demand, said Hongbin Qu, China chief economist at HSBC. "The drop of new export orders and the downside surprise of November exports growth suggest the persisting external headwinds. This calls for Beijing to keep an accommodative policy stance to counter-balance the external weakness, provided inflation stays benign," Qu added.
- Most sub-indexes improved with the exception of output and new export orders, which dipped, possibly reflecting softer end-of-year orders. Encouragingly, a sub-index on new orders rose for the fifth month in a row to 52.7, its highest level since April 2011. A sub-index tracking employment rose to its highest level since February.
- Government data earlier this week showed industrial production growth in November jumped to an eight-month high while inflation ticked up from 33-month lows.
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