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Global Flash PMIs and Return of Investor Optimism


Many leaders were optimistic that the world will avoid a recession at the end of the most recent WEF meeting in Davos. Or, at most, if there were a recession it would be quick and short. The optimism that China would rebound was a large part of the optimism, even though it was lifting covid restrictions.

The meeting happened right after the latest GDP figures from the world’s second largest economy, which were well above expectations. It helped offset some negative reactions to the US’s slower than expected industrial expansion. It begs the question: Is this the bottom? Are there other downsides?

What to watch out for

PMI data may be a clue. It can help you see the direction of future trends in the economy. In the past few months, PMIs in major economies have been below 50, which indicates contraction. However, the consensus indicates that this indicator may be beginning to rise again, especially in Europe.

Europe’s ability to keep up with energy demand has helped boost optimism in the shared economy, with stocks moving to 9-month highs. It could also provide additional support if PMIs move above 50.

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