US markets opened lower this morning by more than half of one percent despite better-than-expected releases in ISM and confidence figures. Going into the morning, trading was mixed as grim news including a delay in the stress test results and Chrysler’s bankruptcy was matched by uplifting indications of recovery abroad. China’s purchasing managers index came in at 53.5, signaling expansion in manufacturing for the second month, as the effects of the nation’s large stimulus package start to weigh in. Elsewhere in the world, Japan’s unemployment rose to 4.8%, a four year high, but didn’t concern investors heavily as the nation has shown signs of improvement in exports and industrial production. Closer to home, indicators in the UK showed improvement in the PMI to 42.9 from 39.5 while mortgage approvals came in lower than expected but still increased to a ten month high at 39,000. Markets in Europe are trading higher by more than one percent while dollaryen has started the month close to 100 yen per dollar before pulling back slightly to just above 99.1.
The Institute for Supply Management’s ISM Manufacturing index improved in April to 40.1 from 36.3. The figure came in above Bloomberg consensus estimates for a rise to 38.4. While increasing for the fourth time off a December low, the manufacturing sector has now been in a decline for fourteen consecutive months, the longest stretch since a record nineteen declines following the dotcom bubble collapse and terror attacks at the start of the decade. Also seeing upside in the release were prices paid, which rose less than expected to 32.0 from 31.0; economists had expected the measure to rise to 34.0. Ultimately the release did not surprise investors as regional increases in Chicago, Dallas, New York and Philadelphia foreshadowed a rise in the ISM figure.
The University of Michigan’s Consumer Confidence index rose better than forecast to 65.1 from 61.9. Analysts polled by Bloomberg had expected no change from the previous month. The increase marks the third consecutive rise in the index to the highest level since September and raises investor optimism that the height of the turmoil may be over. Factory Orders, meanwhile, resumed the downward trend by falling nine-tenths of a percent in March following a small 0.7% gain in February.
Also to be released later in the session is the monthly sales figures for vehicles. While rarely market moving, investors will be watching the indicators amid continued efforts by GM to cut costs as it approaches a June 1 deadline.
