The Japanese Nikkei 225 tumbles for another day while yen recovers against dollar after a relatively soft Tankan report. Nikkei breached 19000 handle today to as low as 18928 so far and is down nearly -0.9% at the time of writing. That compares to 19746 high made just last week. The tankan large manufacturing index was unchanged at 12 in Q1 versus expectation of rise to 14. Medium and small manufacturing indices dropped from 7 to 4 and from 4 to 1 respectively. Non-manufacturing indices rose from 17 to 19 (large), 10 to 14 (medium) and 1 to 3 (small). All industry indices rose from 4 to 16 (large), 9 to 10 (medium) while small dropped from 3 to 2. Meanwhile one important detail to look at is that all industry capex spending dropped -1.2% versus expectation of 0.5%. That compared to Q4's strong reading of 8.9%. Also released from Japan, manufacturing PMI was finalized at 50.3 in March.
From China, the official PMI manufacturing rose to 50.1 in March versus expectation of fall to 49.7. HSBC manufacturing PMI was revised slightly higher to 49.6. A Markit economist noted that the data indicated subdued domestic and foreign demand and dampened output growth. And downsizing in companies caused the fastest pace of job reductions since last summer. Released from Australia, building approvals dropped -3.2% mom in February versus expectation of -6.0% mom.
Looking ahead, manufacturing data will be a key focus today. Swiss will release SVME PMI. Italy and will release manufacturing PMI while Eurozone will release PMI manufacturing final. UK PMI manufacturing will be the main focus in European session and a strong number would help send EUR/GBP back towards 0.7013 near term low. From US, ADP employment and ISM manufacturing will be the main focus. Markets will also look into the employment component of ISM manufacturing, which stood at 51.4 in February.