It’s not just China anymore. Unfortunately.
The Caixin Media and IHS Markit Purchasing Managers Index for China’s manufacturing sector fell to 49.7 in December  from 50.2, its lowest reading since May 2017. That confirms a trend seen in the official government PMI on Monday, which showed a drop to 49.4 in December, the weakest since early 2016. In these indexes any reading below 50 indicates contraction.
China’s manufacturing sector has contracted for the first time in 19 months.
And other export-oriented Asian economies are reporting a similar slowdown. For example Taiwan’s Nikkei and IHS Markit manufacturing PMI fell to 47.7 in December. The index had already fallen into the contraction zone in November at 48.4. In December 2017 the index was at 56.6. In Malaysia the PMI fell to 46.8 for December from 48.2 in November. In South Korean the PMI indicted a contraction for the second consecutive month. South Korean exports fell in December.
The U.S. manufacturing PMI is scheduled for release on Thursday and December jobs numbers are due on Friday.
As of 10:20 a.m. New York time, the Standard & Poor’s 500 index was down 0.59% and the Dow Jones Industrial Average was lower by 0.63%. The NASDAQ Composite was off 0.68% and the small cap Russell 2000 had tumbled 1.22%
The CBOE S&P 500 Volatility Index (VIX) was up 6.25% to 27.01, reflecting greater demand for risk hedges on the Asian manufacturing news.
U.S. crude benchmark West Texas Intermediate was down slightly by 0.07% to $45.38 a barrel. International crude benchmark Brent was up 0.46% to $54.12 a barrel.
Risk havens are doing well today with gold up 0.46% to $1287.20 and the yen ahead 0.87% against the U.S. dollar. The yen, the world’s favorite safe haven currency, is now up 2.2% in the last four days.
