(03 AUGUST 2020)DAILY MARKET BRIEF 1:China manufacturing PMI at record.

Equities in Tokyo (+2.10%) and Shanghai (+1.08%) kicked off the week on a positive note on the back of promising economic data. The Japanese GDP printed 2.2% y-o-y contraction in the second quarter versus -4.4% expected by analysts and the manufacturing PMI, 45.2, revealed a softer slowdown in activity in July.

Meanwhile, Caixin’s Chinese manufacturing PMI printed 52.8 in July, the highest figure on record, surpassing the market expectation of 52.3 as post-Covid recovery in activity gained momentum.

The ASX 200 (-0.31%) lagged however despite a solid manufacturing PMI read, as energy and mining stocks fell on softer oil and commodity prices.

Elsewhere, losses were dominant. Stocks in Philippines led losses with a 3.58% drop on Monday as authorities ordered stricter lockdown in Manila.

European and US stock markets are poised for a flat start to the week, as investors await manufacturing and services PMI on Monday and Wednesday, the Bank of England (BoE) rate decision on Thursday and the US jobs data on Friday.

Strong rebound in Western economic activity should better the investor mood this week, even though the short-term direction will likely remain blurred by the persistent Covid threat and global trade tensions. The US is expected to announce new measures on a broad list of Chinese-owned software companies which threaten the US national security in the coming days.

But price retreats are still interesting dip-buying opportunities for investors chasing new highs in US stocks. The S&P500 remains bid above the 3200 mark and there is nothing stop the Nasdaq from rebounding above the 11000 level and renew record.

In the UK, the downside correction in oil could be a threat for the appetite and limit the topside near the 6000p, while the strong sterling seems to have a marginal negative impact on FTSE demand at the moment.