Industrials, Metals in Focus as China Manufacturing Contracts; Traders Bet on Stimulus (FCX) (CAT)

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Overnight data from China showed that manufacturing in the country declined in August. A preliminary Flash PMI reading from HSBC showed a disappointing reading of only 47.8. This was down from 49.3 in July and the weakest level since November. A reading below 50 indicates a contraction. The data is also disappointing in light of recent efforts by China to stimulate the economy. Instead of opting for a massive stimulus program like it did in 2008, China has responded to the recent slowing by taken a nuanced approach to easing that targets specific sectors, such as consumers. The disappointing data may force officials there to step up efforts to spur growth.

In response to the poor manufacturing data, copper prices rallied early in Thursday, as some believe more stimulus in the country is imminent. Traders will be likely be focused on companies like Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) today. Industrial names with exposure to China like Caterpillar Inc. (NYSE: CAT) might also be in play.

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