Yesterday, tech stocks helped Wall Street get its head back in the right place, especially Amazon.com, whose stock recovered 5.7% (thanks to a buying advice from Bernstein). The other stars of the quotation, such as Microsoft, Alphabet and Apple, have all increased by more than 1.5%. However, the Nasdaq 100 still loses 9% on its records of the beginning of the month.
The September PMI Flash indicators are due today. This monthly survey probes the morale of purchasing managers in industry and services in several countries, with a fairly simple question: is your company doing better or worse than the previous month? It is a good indicator of economic confidence. Naturally, the indices collapsed in April, before skyrocketing back up to July. September will undoubtedly be a more instructive month: the mirage of the V-shaped recovery has faded, the pandemic is regaining momentum in Europe and the presidential election is looming. What will purchasing managers think of the situation? Earlier in Asia-Pacific, the manufacturing index was below expectations and in contraction in Japan.
The IHS Markit Eurozone Composite PMI index rose from 51.9 in August to 50.1 in September 2020, compared with forecasts of 51.7. At such a neutral level (50), it is difficult to interpret the results. At best, we have a slowdown in the pace of economic recovery or at worst, a stagnation of the recovery. The reason for this is that the increase in the number of infections, accompanied by new restrictive measures, is slowing down the demand for consumer services in particular. The service sector, which had already stalled in August, has indeed recorded a sharp contraction from 51 to 47.6 against 50.5 expected. However, manufacturing output growth accelerated in September to reach its highest level since February 2018 at 53.7 against 51.5 last month and 51.7 expected. This manufacturing boom was largely driven by Germany, which recorded its strongest increase since January 2018 and offset the overall decline in services activity.
In addition to the PMI indicators, investors are waiting for a new speech from Fed boss Jerome Powell, who will address US Congressmen on the economic consequences of Covid-19. American parliamentarians yesterday found common ground to avoid a shutdown. Powell is expected to shake the executive again to adopt support measures to complement the Fed's cash machine gun.
Today on the agenda, we also have weekly US oil stocks.