China's Manufacturing Index Signals Contraction, But Markets Miraculously Maintain Gains

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China’s HSBC Flash Purchasing Manager’s Index climbed to 48.8 in January, up from 48.7 in December.This is a preliminary reading on Chinese manufacturing activity, ahead of the official PMI number. A reading below 50 signals contraction.

Signs that China might be slowing have been met with mixed emotions from traders.  On one hand, weak data may encourage easier monetary policy, which in a sense is bullish.  Then again, bad data is still bad data.

Tonight, markets are showing a mixed response to the anemic PMI number. Hong Kong’s Hang Seng is up only 0.3% after being up as much as 1.0%.

Japanese, Korean, and Australian markets continue to trade higher.

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