Manufacturing rises in China; US stocks and Dollar on upward trend

China's PMI hits 4-month high, while US markets reflects optimism amid Fed policy reassessment

By Ahmed Azzam | @3zzamous | 2 January 2024

Market open
  • Caixin China General Manufacturing PMI climbs to a 4-month peak in December.

  • US stock futures stable in the first day of 2024, following a robust performance in 2023.

  • Dollar index ascends, with markets eyeing potential Fed rate cuts and key economic data.

China's manufacturing sector shows resilience

The Caixin China General Manufacturing PMI inched up to a four-month high of 50.8 in December 2023 from 50.7 in November, surpassing market expectations of 50.4. The uptick in the index, which indicates expansion, comes as a result of Beijing's fiscal and monetary policy adjustments aimed at fostering a sustained recovery. This improvement was supported by faster growth in output and new orders, while cost pressures remained moderate.

US stock market maintains momentum

US stock futures held steady on Tuesday, as the market seeks to build on the impressive gains achieved in 2023. The year saw a remarkable rally in major indexes; the S&P 500 enjoyed its longest winning streak since 2004, the Dow and S&P 500 surged 13.7% and 24.2% respectively, and the Nasdaq 100 leapt 54.9%, its best performance since 2020. This surge was fueled by a strong rebound in mega-cap technology stocks and growing enthusiasm over artificial intelligence developments.

Dollar strengthens amid Fed minutes anticipation

The dollar index rose above 101.5, marking its third consecutive session of gains, in what appears to be a technical rebound. Investors continue to evaluate the Federal Reserve's monetary policy direction amid signs of moderating inflation and slowing economic growth. With markets pricing in a high likelihood of a Fed rate cut by March, attention now turns to upcoming key economic data releases, including job openings, nonfarm payrolls, and minutes from the Fed’s December meeting.