On Wednesday, April 1, more readings of the PMIs reports for March appeared, it is the month in which the world was struggling with the coronavirus epidemic. After initial readings, we are currently observing final readings that are not optimistic, which may have an impact on stock indexes.
The Germany Manufacturing PMI fell in March this year to 45.4 points. Earlier, a decline to 45.7 points was estimated. The reading indicated the fifteenth month in a row when activity was shrinking in factories. Both production and new orders have fallen most since April 2009, which was due to the growing weakness in international demand and growing disruptions in the supply chain, according to published data.
In turn, the French Manufacturing PMI fell in March to 43.2 points from 49.8 points in February. The publication pointed to the second consecutive month of decline in industrial activity and the sharpest slump since January 2013. The main reason seems to be a nationwide lockdown of all activities to stop a coronavirus pandemic that hit the economy. Production and new orders fell at the fastest pace since March 2009. New export orders also fell due to much lower demand, especially from China and Germany.
The Italian Manufacturing PMI fell in March to a record low of 40.3 points. Production has shrunk at the fastest pace in almost 23 years, and the decline in order volume has been the fastest since March 2009. New export orders have fallen at the fastest pace since March 2009. Also, the rate of job losses has been the fastest since August 2012.
However, it seems that the worst is not yet behind us. Closing economies may take much longer. There is even talk of a possible extension of the restrictions until July. This may not be the best information for listed companies and thus for stock indices as significant declines seem to be occurring today following earlier potential upward corrections.
Daniel Kostecki, chief analyst at Conotoxia Ltd. (Forex Cinkciarz.pl service)
The above comment is not a recommendation within the meaning of the Regulation of the Minister of Finance of October 19, 2005. It has been prepared for information purposes and should not be the basis for making investment decisions. Neither the author of the study nor Conotoxia Ltd. are responsible for investment decisions made on the basis of the information contained in this commentary. Copying or reproduction of this document without the written permission of Conotoxia Ltd. is prohibited.
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