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Global Manufacturing Growth Accelerates in August


Today's financial recap and tomorrow's financial outlook.

Global manufacturing PMIs were much better over the past two days, leading most equity indexes higher, including indexes in the US. China's HSBC manufacturing index rose to 50.1 from 47.7 in the prior month. The estimate was for 50.2. This was the first reading in the index above 50 since April, signifying growth in that sector of the economy. Indian markets were spooked again as a fresh round of concerns surfaced that the country did not possess enough currency reserves to pay its imports over the coming year.

The S&P 500 (INDEXSP:.INX) opened 19 points higher following yesterday's closure for Labor Day. The ISM manufacturing index rose to 55.7 from 55.4 in the month prior. The estimate was for 54.0. Strong growth was seen in the new orders component, which rose to 63.2 from 58.3 in the prior month. Transportation and consumer discretionary stocks were the leading sectors today. Interest-rate-sensitive sectors like utilities and REITs were down more than 1%. Telecom fell 1.65%, largely due to the 2.91% decline in Verizon (NYSE:VZ).

In the late morning, House Majority Leader John Boehner and House Majority Leader Eric Cantor pledged their support for President Obama's plan to conduct military actions in Syria. US equities turned down from 1% to unchanged on the day before a somewhat dovish article from Market News International's Fed leaker Steve Beckner brought stocks off the lows of the day.

Verizon finalized the terms to purchase Vodafone's (NASDAQ:VOD) 45% stake in its subsidiary, Verizon Wireless. The deal was finalized at $130 billion in cash and stock options. It was reported that Verizon may issue $50 billion in debt and take on $60 billion in loans to finance the deal. Additionally, Microsoft (NASDAQ:MSFT) purchased Nokia's (NYSE:NOK) handset business and its patent portfolio for $7.2 billion. This shifted Microsoft's focus toward mobile strategies rather than software, which caused some concern amongst investors who view the company as primarily focused on software. Microsoft was down 5% today.

Tomorrow's Financial Outlook

Economic data in the US will be the lightest of the week tomorrow with just July's trade balance, August challenger job cuts, car sales, and the Fed's Beige Book being released. July's trade deficit is estimated to widen to -$38.6 billion after tightening to a 3-year high last month at -$34.2 billion. Car sales, released by individual automakers throughout the day, are estimated to rise to an annualized rate of 15.8 million after falling last month to 15.6 million.

In global market-moving news, the eurozone will release its preliminary estimate of 2Q GDP tomorrow morning alongside retail sales and its services PMI. Growth in the eurozone is estimated to remain unchanged from the prior year at a rate of -0.7%. Other market-moving data due out is the preliminary estimate of Australia's 2Q GDP and the monthly monetary policy decision from the Bank of Canada.

Major US earnings scheduled for tomorrow include Ciena (NASDAQ:CIEN), Navistar (NYSE:NAV), and Dollar General (NYSE:DG).

Twitter: @Minyanville

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