China: January PMIs signal potential easing – MUFG

💡 DMK Insight

China’s January PMIs are a red flag for global markets, and here’s why: The Manufacturing PMI at 49.3 and Non-Manufacturing PMI at 49.4 signal contraction, which could dampen investor sentiment and lead to a ripple effect across commodities and currencies. Traders should keep an eye on how this data influences the Chinese yuan and related assets, especially if the trend continues. A sustained downturn could prompt the PBOC to implement further easing measures, which might weaken the yuan and boost gold prices as a safe haven. But here’s the flip side: if these numbers lead to aggressive stimulus from China, it could spark a short-term rally in risk assets. Watch for reactions in the S&P 500 and commodities like copper, which often reflect Chinese demand. The key levels to monitor are the 50 mark for PMIs—any sustained readings below this could indicate deeper economic issues. Keep an eye on the next set of economic indicators for further clarity on this situation.