A Foolish Weekly News Wrap-Up

newspaper Understanding the macroeconomic environment is important in investing as it influences market sentiment and affects the stock market directly. Let’s take a look at three global economic updates or interesting key developments that happened last week which investors should take note of.

China Factory Activity Up

In China, HSBC’s private survey of Chinese manufacturing activity crossed the key 50-level for the first time in four months, suggesting that government stimulus measures have started to steer Asia’s biggest economy back to positive growth.

In the index compiled by Markit Economics, a reading above 50 indicates an expansion in manufacturing activity. The final index is based on five individual indexes measuring new orders, output, employment, suppliers’ delivery times and stock of items purchased.

“This implies that growth in China’s manufacturing sector has started to stabilise on the back of a modest rebound of new orders and output,” Hongbin Qu, HSBC’s China economist said in a statement.

United States Non-Farm Payroll

The Non-Farm Payroll report was out on Friday – U.S. Labour Department reported a less than expected job growth of 169,000 which missed economists’ estimates of 180,000. While there are signs that third-quarter economic growth may have slowed down a bit, the unemployment rate fell to 7.3%, the lowest since December 2008.

August’s poor jobs report showed only modest job gains.  Declining revisions to prior two months and a decline in labour force participation rate leaves Fed with mixed signals as the central bank looks to taper off its vast quantitative easing programme.

Syria conflict

At the end of the G20 summit, there was still disagreement on the actions to be taken with regards to the Syria crisis. UK, Canada and Turkey supported Mr Obama’s call for action; the only leaders at the G20 meeting to commit to force in Syria are the US and France. On the other side, China and Russia both refused to agree to a UN Security Council resolution against Syria and reiterated that any military action without the UN would be illegal.

Mr Obama will be seeking public support from the Congress on Tuesday (10 September) to authorise military action.

Escalating tensions in the Middle East might disrupt the flow of oil from the region and cause crude oil prices to soar. If crude oil prices increase, you may hear people complaining about the high petrol prices again. In contrast, rising oil prices will likely bode well for oil and gas companies such as Interra Resources (SGX: 5GI), Ramba Energy (SGX: R14) and Mirach Energy (SGX: C68).

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.   Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.