Positive manufacturing figures out of US boost global markets

Thursday, May 3, 2012
AP and AFP

LONDON/HONG KONG--A surprisingly big rebound in a closely watched U.S. manufacturing survey continued to shore up markets Wednesday, particularly in continental Europe where traders returned to their desks after the May Day public holiday to the news that the Dow Jones industrial average closed at its highest level in five years.

The Institute for Supply Management reported that U.S. manufacturing expanded last month at its strongest pace since June, with orders, hiring and production all up. That news came on top of a similar report out of China, the world's No. 2 economy and has helped boost optimism about the state of the global economy, despite the ongoing debt-related problems in much of Europe.

“Just as I am getting really concerned about the depths of Europe's economic slowdown, and the lack of policy measures to combat it, global financial markets have a spring in their step thanks to better surveys in the U.S. and elsewhere,” said Kit Juckes, an analyst at SG Securities.

In Europe, Germany's DAX was up 0.8 percent at 6,810 while the CAC-40 in France rose 1.2 percent to 3,250. The FTSE 100 index of leading British shares, which was open Tuesday and reacted to the ISM upside rise unlike its counterparts in Frankfurt and Paris, was down 0.3 percent at 5,793.

Wall Street was poised for further modest gains, a day after the Dow Jones industrial average closed at its highest mark since 2007 — both Dow futures and the S&P 500 futures were up 0.1 percent.

The focus over the rest of the week is likely to center on the U.S. economy in the run-up to Friday's release of March nonfarm payrolls data — the figures often set the market tone for a week or two after their release.

Later Wednesday, investors will have the monthly private payrolls report from ADP to assess. The ADP figures often provide a guide toward the actual government report.

“A strong reading would follow on nicely from yesterday's data, and would set the stage for a positive report on Friday,” said Chris Beauchamp, market analyst at IG Index.

Asian stock markets climbed on Wednesday after strong manufacturing data from the United States and China boosted optimism over the state of the world's two biggest economies.

The dollar rebounded after hitting a two-month low against the yen while the Dow rallied to its best close for more than four years.

Tokyo rose 0.31 percent, or 29.30 points, to 9,380.25 and Seoul climbed 0.86 percent, adding 17.08 points to 1,999.07 while Sydney closed 0.14 percent, or 6.4 points, higher at 4,435.9.

Hong Kong was 1.02 percent higher, gaining 214.87 points to 21,309.08 while Shanghai climbed 1.76 percent, or 42.12 points, to 2,438.44

And on Wednesday HSBC said its China PMI contracted for the sixth straight month in April but at a much slower pace and not as much as preliminary figures suggested.

The results provided some relief to investors after a string of weak figures from Beijing and Washington in recent months.

Eyes will now be on the United States for the latest batch of employment data due out later this week, with traders looking for clues on the state of the economy.

Gold was at US$1,650.70 an ounce at 1050 GMT.

In other markets:

— Singapore closed 0.93 percent higher, adding 27.57 points to 3,006.14.

DBS Bank gained 1.36 percent to end at SG$14.15 while palm oil producer Wilmar International was up 1.44 percent at SG$4.94.

— Manila rose 0.50 percent, or 26.14 points, to 5,228.84.

Alliance Global Group gained 5.17 percent to 13 pesos and Universal Robina was up 3.07 percent at 67 pesos but Bloomberry Resorts slumped 24.9 percent to 9.01 pesos.

— Wellington advanced 1.05 percent, or 37.65 points, to 3,614.97.

Contact Energy climbed 1.65 percent to NZ$4.93 and Fletcher Building jumped 2.20 percent to NZ$6.50 while Telecom was unchanged at NZ$2.64.

— Jakarta rose 0.56 percent, or 23.31 points, to 4,219.30.

— Kuala Lumpur added 0.75 percent, or 11.78 points, to 1,582.39.

Financial firm CIMB Group Holdings gained 1.48 percent to 7.52 ringgit and plantation giant Sime Darby added 0.10 percent to 9.75 ringgit.

— Bangkok climbed 0.86 percent, or 10.57 points, to 1,239.06.

Banpu rose 2.16 percent to 568.00 baht and PTT Plc gained 2.28 percent to 359.00 baht.

— Mumbai slid 0.10 percent, or 16.90 points, to 17,301.91.

India's leading vehicle maker Tata Motors fell 3.82 percent to 304.65 rupees while rival Maruti Suzuki India closed down 2.76 percent to 1,332.1, after most auto firms posted disappointing car sales data for April.

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