After a lacklustre European trading session, industrial commodities led a risk-on rally during US hours. Stronger than forecast demand for crude, petrol and other energy products reinforced the positive manufacturing environment illustrated by PMI reads over the last week. Copper and iron ore rallied 2% to 3%, and the exuberance saw SPX materials stocks lead share markets higher. The rally was aided by a slew of White House tweets calling for airline assistance.
US crude inventories rose just 500,000 barrels over the week, and significant draws on petrol and distillates once again surprised analysts with a stronger demand picture. The data supports the reported ongoing expansion in manufacturing activity around the globe, and US share investors are now pricing a full economic recovery.
Currency markets remain calm, with most majors holding ground overnight amid modest support for commodity currencies. The risk on flavour saw bonds give up gains, although both gold and cryptocurrencies moved higher, highlighting some concern around equity valuations.
Data today includes Japan national accounts and New Zealand business confidence. Futures indicate a positive if subdued response to the international enthusiasm. Tonight brings German trade data and US jobless claims. Both releases have the capacity to confirm or countermand risk positive sentiment.