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Chinese PMI feeds growth fears

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News that a key gauge of the Chinese manufacturing economy has slid to its lowest level in nine months is feeding traders' concerns about global growth. The official Purchasing Managers Index from Beijing came in at 52 in May. This represents a significant downswing from a reading of 52.9 in April, but also showed that Chinese industry is still a bit more robust than economists had led traders to expect -- consensus forecast was for 51.6. Any reading above 50 indicates accelerating manufacturing activity, so Chinese factories are still ramping up, albeit at a slower rate of increase than previously. Stocks in Shanghai edged up while their counterparts in Hong Kong edged down on the news. The prices of copper and other key industrial commodities remained firm. Given these trends, look to China funds like FXI ( quote ) to trade relatively steadily this morning, although there could always be surprises: The deceleration has been widely attributed to Beijing's efforts to rein in lending and otherwise slow capital flows feeding inflation in China. In that respect, the campaign definitely seems to be working. However, it may also be a secular slowdown. German PMI numbers are also at their lowest since October and manufacturing activity is now slower than it has been since 2009. In that event, there may still be room for the yuan to rise relative to the euro and other currencies. It is stronger against the dollar today, which should push CNY ( quote ) and CYB ( quote ) upward.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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