China HSBC/Markit Flash reading for manufacturing PMI for February – What is the impact likely to be?

Due at 0145GMT: HSBC/Markit Flash reading for manufacturing PMI for February

• expected is 49.5
• prior was 49.5

Let’s look at some scenarios and assess what the impact is likely to be for each…

If the reading comes in at 49.5 or close to (49.4 – 49.6):

• This will be as expected (or close) and the impact may not be large … continuing to create fear of a China slowdown

If the reading comes in at 49.7 – 49.9 :

• This would lead to less fear in the markets (a potential turnaround for China?) and a slightly better positive for ‘risk’

If the reading comes in at or above 50 (putting the index back into ‘expansion’):

• Will be very positive for ‘risk-on’ sentiment
• AUD will view it as a very positive input

If the reading comes in well below 49.5 (say, below 49.3)

• It will reignite China slowdown fears (well enunciated on the telly in recent days … peak China fear?)
• Negative for ‘risk’ and for the AUD and NZD etc.