Chinese stocks are soaring this evening on news that the economy continued to expand in May. The Chinese Purchasing Managers Index came in at 53.1. Stocks in Shanghai and Hong Kong are rallying nearly 3% on the news. Some quotes from Bloomberg:
“The Chinese economy is well on track for recovery and economic growth is picking up steam,” said Lu Ting, an economist at Merrill Lynch & Co. in Hong Kong. “The PMI may trigger a rally for asset prices, especially commodity prices.”
“For the first time the PMI shows genuine evidence that policy really is gaining traction,” said Eric Fishwick, head of economic research at CLSA in Hong Kong. A jump in orders and declines in companies’ inventories suggest “sustained output growth in months to come.”
“Economic growth may continue to pick up in the future as accelerating investment and consumer demand boost industrial production,” Zhang Liqun, an economist at the State Council Development and Research Center, said in a statement with the official PMI. Zhang said that while business sentiment remains “weak,” a PMI reading above 50 shows that “the economy will continue to recover.”
Expect this to give a boost to U.S. and European stocks in the coming hours….