Skip to content

We want to clarify that IG International does not have an official Line account at this time. We have not established any official presence on Line messaging platform. Therefore, any accounts claiming to represent IG International on Line are unauthorized and should be considered as fake.
CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.
CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

Early Morning Call: China factory activity shrinks, sends AUD, CNY down

In China, factory activity fell to a five-month low in May.

Video poster image

Equity market overview

Equity markets fell overnight in Asia.

In China, factory activity fell to a five-month low in May. The NBS manufacturing PMI contracted faster than expected to 48.8 from 49.2 the previous month, and below forecasts of an increase to 49.4. Service sector activity remained in expansion territory, but came in at 54.5, the slowest pace in four months. This is yet another indication that the recovery has been uneven for the world's second largest economy.

Last month, imports contracted sharply, PPI fell, industrial profits plunged, and industrial production missed forecasts. This latest data sent Hong Kong, mainland China and Australian indices down. The Australian dollar, New Zealand dollar and yuan lost ground against the greenback.

Japan also released weaker-than-anticipated statistics overnight, weighing on its equity market. Retail sales rose 5% in April from a year earlier, missing forecasts for a 7% gain. Industrial output unexpectedly fell. 0.4% in April from the previous month. The contraction dashed economists' median market forecast for a 1.5% gain. Both domestic and overseas orders contributed to that decline.

The production of chip-making equipment was particularly affected, down 24.6%, and falling demand for smartphones and vehicle equipment affected flat panel-making equipment, down 66.6%.

Macroeconomic news

At 1pm, Germany consumer price index (CPI) is expected to slow to 6.5% in May year-on-year (YoY), a 13-month low, from 7.2% in April.

At 1.30pm Canada's first quarter (Q1) gross domestic product (GDP) is forecast to rise by 0.4% quarter-on-quarter (QoQ).

Earnings

Elsewhere on the equity market, WH Smith forecasts higher full-year profit as it bets on strong travel demand during the summer. Total group revenue for the 13-week period ended May 27 was up 23% year-on-year.

British discount retailer B&M Europe forecast higher 2024 core earnings. The group reported adjusted core profit of £573 million down 7.4% from last year. Like-for-like sales for its UK unit in the first nine weeks of the new financial year were up 8.3%.

HP fell in extended trading, after missing revenue expectations. Second quarter came in at $12.90 billion. Analysts were expecting $13.09Bln. The group's Personal Systems division, that's desktops and laptops, plummeted 29% in the period, while the company's printing segment recorded a 5% fall.

HP is not the only group in the sector going through difficult times. Global PC shipments declined nearly 30% in the first three months of the year. We are now at levels that are lower than before the pandemic. HP however expects consumer demand to be stronger in the second half of the year.

After posting a better-than-forecast earnings per share (EPS) of 80 cents in fiscal Q2, HP now expects an annual adjusted profit between $3.30 and $3.50 per share. Hewlett Packard Enterprise posted earnings of 52 cents per share, 3 cents higher than forecast. Revenue missed expectations.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Start trading forex today

Trade the largest and most volatile financial market in the world.

  • Spreads start at just 0.6 points on EUR/USD
  • Analyse market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.