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Daily Briefing: PMI cheer?

June flash PMI readings are providing markets with something to cheer about. After robust improvements in Australia and Japan, the French flash PMI showed business activity unexpectedly rebounded into growth after three months of downturn.

People wait outside an MK2 cinema in Paris, June 22, 2020. REUTERS/Benoit Tessier

It broke through the magic 50 level that divides expansion from contraction. Compare that with 32 in May and 11.1 in April and you know why the euro has risen 0.3% against the dollar -- it was flat earlier.

Earlier, Australia’s composite PMI was also above 50, almost doubling from last month. Japan’s composite was at 38, but that’s still up 10 points from the May reading. There are expectations of similar rises across the euro zone and the United States, perhaps less so in the UK.

So barring more lockdowns, economies may well be on the road to recovery. Euro area consumer confidence yesterday showed continued improvement as did U.S. indicators such as the Chicago Fed index.

As for the coronavirus, it may have sickened over 9 million people worldwide, and 12 U.S. states are seeing record infection rates, but stock markets are again roaring higher and the dollar looks set to extend its losses after yesterday's tumble -- the biggest one-day fall since early April.

European shares are up 1.1%, picking up speed after the PMIs. MSCI's world index has risen almost half a percent.

Earlier today, though, markets were whipsawed by White House adviser Peter Navarro, who initially said the trade deal with China was over, only to walk back those comments soon after. Treasury Secretary Steven Mnuchin echoed President Donald Trump's recent threat about "decoupling" from China.

They sent the yuan reeling to one-week lows, lowered mainland shares 0.5% and caused a selloff in trade-oriented currencies such as the Aussie. All’s well that ends well, however – once Navarro backtracked and Trump too denied the deal had collapsed, U.S. equity futures, down as much as 1.6%, recovered into the black.

Asian and emerging-market equities were also trading stronger after the earlier scare.

In European corporate news: Many FTSE 250 companies, particularly in travel and leisure, are likely to see gains as PM Boris Johnson is expected to announce cinemas, museums and galleries in England will re-open from July 4.

French drugmaker Sanofi said it expected to get approval by the first half of 2021 for a potential COVID-19 vaccine it was developing with Britain's GlaxoSmithKline.

Boehringer Ingelheim is selling most of its nearly one billion-pound stake in Hikma. Cosmo Pharmaceuticals announced regulatory approval of Gi Genius in Israel.

German metals trader Kloeckner rose 13.4% after the company gave its second-quarter outlook.

Germany’s Bayer scored a victory in its ongoing litigation over its glyphosate-based weed killer Roundup. A U.S. federal appeals court blocked California from requiring that the product carry a cancer warning.

European Union antitrust regulators warned about the possible anti-competitive effects of the LSE’s $27 billion takeover of Refinitiv and opened a four-month investigation into the deal.

Finally, watch out for more acquisition mania around the world. Hedge fund investor William Ackman is the latest to be raising a “blank-check” vehicle -- a $3 billion special-purpose fund that will give him firepower to compete for big acquisitions against private equity firms.

-- A look at the day ahead from EMEA deputy markets editor Sujata Rao. The views expressed are her own --