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Pre-Market Primer: US Stocks Lifted by Chinese Mega-Rally


Both the US and China are blowing away Japanese and European manufacturing.

MINYANVILLE ORIGINAL After a strong rally in China, US stock futures are mixed ahead of manufacturing data releases.

Dow (INDEXDJX:.DJI) futures rose 0.22% to 13,123 before the opening bell. Futures contracts on the S&P 500 (INDEXSP:.INX) rose 0.18% to 1,414.60 and Nasdaq (INDEXNASDAQ:.IXIC) futures slipped 0.06% to 2,645.50.

US manufacturing data will be released later this morning. Economists predict that industrial production in November rose 0.3% after declining by 0.4% in the month prior. The preliminary reading of US manufacturing PMI for this month is projected to show that expansion slowed to 51.8 from November's 52.4 (PMI readings above 50 signal expansion of the sector).

Consumer prices in the US fell a bit more than expected in November. On a monthly basis, the consumer price index fell 0.3%. The decline was mostly due to decreases in food and energy costs. Excluding those volatile items, the index rose a modest 0.1%.

Chinese stocks advanced the most since 2009 today on data showing the country's comeback is accelerating. HSBC's December Flash Manufacturing PMI reading rose to a 14-month high of 50.9 from 50.4 in November. State-owned institutions piled into equities and financial companies rallied on speculation that the government will allow more funds to buy stocks. The Shanghai Composite Index rose 4.3% today.

Japan's Nikkei Index (INDEXNIKKEI:NI225)ended the day down slightly after the country's Tankan Large Manufacturers Index dropped more than expected to -12 in the fourth quarter from a previous reading of -3. Small manufacturers fared worse at -18. This is the fifth straight negative reading on this survey.

This weekend, Japan will hold elections that will likely restore the Liberal Democratic Party to power. The LDP enjoyed almost unbroken dominance from the end of World War II until 2009. LDP leader Shinzo Abe favors more aggressive monetary easing to help pull Japan out of its two-decade deflationary funk.

Europe isn't doing much better. The Eurozone PMI Composite Flash showed both business activity continuing its decline in the region. The reading for manufacturing was 46.3 and for services, 47.8. France and Germany both saw declines in both sectors in December.

Apple (NASDAQ:AAPL) started selling the iPhone 5 in China today, but it isn't projected to take too much market share since Apple doesn't have a deal with China Mobile (NYSE:CHL), the country's largest operator. Chinese handsets don't normally come with a carrier subsidy as they do in the United States. This leaves Chinese less inclined to spend hundreds of dollars on a phone.

Adobe (NASDAQ:ADBE) shares advanced 5% after the Photoshop maker reported better-than-expected earnings of $0.61 per share on $1.15 billion in revenue.

Twitter: @vincent_trivett
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