Financial Markets…Developing-country stocks gained for a second day on Monday with Indian shares surging to record highs. The benchmark MSCI Emerging Market index advanced 1% after weak Chinese manufacturing data spurred speculation the government will take further steps to bolster economic growth. China’s Shanghai Composite Index climbed 0.9%, extending its two-day rally to 3.7%, and India’s S&P BSE Sensex rose 1.4% to an all-time high, led by foreign investors (who hold nearly half the market traded shares in the country). Indian shares have been the best performer this year among major developing-country stocks.
Portuguese government bonds climbed for a seventh day amid growing optimism the country will regain full access to debt market with the end of its €78 billion rescue program in May. The benchmark 10-year yields fell as much as 12 basis points to 4.15% in early trading, the lowest level since March 2010. Greek government securities also rallied with the nation’s 10-yield sliding 19 basis points to 6.72% as upbeat euro-area manufacturing and services data added to signs the region’s economic growth is on track.
High Income Economies…The flash estimate for the Markit U.S. manufacturing purchasing managers' index (PMI) for March came in at 55.5, down from 57.1 in February. While the fall was larger than expected, the index, where a reading above 50 indicates growth, signaled that U.S. manufacturing business conditions continued to improve due to improving economic fundamentals and, to a lesser degree, an on-going catch-up effect following weather disruptions earlier in the year.
The flash estimate for the Markit composite output index for the Euro Area economy came in at 53.2 for March, slightly lower than February's 32-month high of 53.3, signaling the continued strongest spell of growth since the first half of 2011. New order growth accelerated marginally to the fastest since May 2011, backlogs of work increased the most since June 2011, and employment rose for a second month, providing the first signs of job creation since the end of 2011. The flash Eurozone services PMI fell to 52.4 from 52.6 in February. Similarly, the manufacturing index slid to 53.0, in line with expectations, from 53.2 in February.
Industrial production (IP) for Taiwan, China, increased 1.4% (m/m sa) in February, recovering from a 1.70% slump in in January. On a three-monthly annualized basis, IP grew 10.3% (3m/3m saar) in February, following a 11.0% increase in January.
Developing Economies…East Asia and Pacific: China’s flash HSBC/Markit manufacturing purchasing managers’ index fell further in March, reaching an eight-month low of 48.1from 48.5 in February, remaining below the no-change 50 mark, which signals contraction. Contributing to this decline, the output index fell to 47.3 down from 48.8 in February, an 18-month low, and new orders decreased at an accelerated pace.
Latin America and the Caribbean: Mexico’s unemployment rate fell in February, coming in at 4.6% (m/m) down from 5.0% in January, and compared with 4.8% a year ago. About 95.3% of the economically active population was employed in February, while underemployment fell marginally to 8.15% (y/y) from 8.21% in the previous year.
Meanwhile, at its meeting of March 21th 2014, Mexico’s central bank decided to leave the benchmark overnight interbank rate unchanged at 3.5% for the third consecutive meeting as expected, noting that the current monetary policy stance remains consistent with the inflation target of 3%.