Morning Dew - September 3rd 2013

Key Points

• String of poor economic data took its toll on JCI on Monday. August PMI was reportedly declined to a 15-month low of 48.5 from 50.7. This means the manufacturing sector has entered a period of contraction again after the last time it was below 49.7 last January 2013. Inflation data was also released this Monday and the M/M CPI was up 1.12% in August, less than the expected 1.23% increase. Y/Y, August CPI was up 8.79%, also below the expected 8.94%. Still, the core CPI was up 4.48% Y/Y, more than last July's 4.44% increase. The big hit was delivered by the trade balance data however, as exports fell 6.07% in July (Y/Y) despite it was up 2.37% vs. prior month. The resulting impact of the export data was on the trade balance which amounted to a deficit of $2.31B, a lot worse than the expected deficit of $353m.
• On the global economic front, China and European PMIs were showing better-than-expected results, lending support to the global stocks indices. Manufacturing sector continued to expand in China as August PMI ticked up to 50.1 from 47.7 while UK PMI jumped to 57.2 from 54.8.  Germany and France as well as Swiss continued to struggle in August, but Italy and Eurozone saw some improvements. Tuesday will see the PMI for service sector to be released in China while US ISM for manufacturing sector is also scheduled for release. US markets was closed on Monday for national holiday.
• The recovery attempt fell short of resistance at 4239-4261 as the JCI only reached the intraday high at 4206.95. Subsequently, the index fell to as low as 4061.64, just above the 38.2% retracement level of the entire rebound from 3837 to 4195. There is a risk of another attempt downwards on Tuesday and should 4058 fails to hold, we could see a test of the next support at 4016 and subsequently, 3973.

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