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Prospects Daily: Middle Eastern equities slump, US trade deficit widens, Chinese service sector PMIs improve


Financial Markets…US stocks rose for a second day as technology and automobile companies led gains and investors awaited the Federal Reserve’s economic outlook survey. S&P 500 increased 0.6% to 1,648.91 in morning trading in New York.

The MSCI Emerging Markets Index added 0.3% as India’s S&P BSE Sensex index climbed 1.8%, rebounding from yesterday’s biggest decline in more than two weeks. Benchmark gauges in Indonesia and the Philippines lost at least 1.9%.

The Bloomberg GCC 200, Index of the Middle East’s biggest stocks, slid 1.8%, the most in more than a week, as the U.S. moved closer to a military strike against Syria. Dubai’s main gauge lost 3.7%, dropping 7.8% in three days.

West Texas Intermediate oil declined 0.9% to $107.59 a barrel while Brent crude slipped 0.7% to $114.87. Copper dropped for the first time in three days and zinc, lead, aluminum, gold and silver fell at least 1%.

High Income Economies...The U.S. trade deficit widened by 13.3% (m/m nsa) to $39.1 billion in July as exports dipped, although imports rebounded suggesting some firming in domestic demand in the third quarter. The three-month moving average of the trade deficit, which irons out month-to-month volatility, decreased to $39.1 billion in the three months to July from $39.3 billion in June. Imports of goods and services in July increased 1.6% led by record imports of autos, parts and engines.

Meanwhile exports of petroleum products also hit a record high.

The number of unemployed people in Ireland dropped again in August, falling for the 14th successive month, with the unemployment rate falling to 13.4%, from 13.5% in July.  Jobless claims fell by 3,400 to a seasonally adjusted 415,300 last month.  The positive employment data coincided with figures suggesting the country’s services sector – which accounts for 70 per cent of the economy - grew at its fastest rate in six years last month.  The services Purchasing Managers’ Index (PMI) increased to 61.6 in August from 57.6 July, the highest since February 2007, and well above the 50 mark, which denotes an expansion in activity.

Japan's service sector activity picked up in August after July's brief slowdown, supported by higher new order inflow.  The headline seasonally adjusted PMI rose to 51.2 from 50.6 in July, marking the tenth successive reading above the 50 mark and making this the longest streak of sustained growth ever recorded in this series, which began in September 2007.

Developing EconomiesEast Asia and Pacific: China’s composite PMI, which measures activity in the manufacturing and service sectors, rose to 51.8 in August u from 49.5 in July, ending contraction since March as business activity in the service sector strengthened with new orders expanding rapidly in response to increased client demand.

South Asia: India’s composite PMI declined further in August to 47.6 from 48.4 in July as the uncertain economic outlook led to a rapid decline in the service sector. The business activity index in the service sector fell to 47.6 (sa) in August from 47.9 (sa) in July.

Sub-Saharan Africa: South Africa’s manufacturing sector PMI strengthened significantly in August with the purchasing managers’ index rising sharply to 56.5 (sa) from 52.2 in July (sa). The employment index also rose above the 50-point mark for the first time since November 2012, with a reading of 51.2 in August from 47.5 in July.

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