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Stocks rebound helped by Chinese data

Stocks in Europe continue to rebound this morning, and it feels like the strong close in US markets last night has spilled over to this side of the Atlantic.  

Even though the North Korean tensions are still bubbling away in the background, traders are keen to move back into equities while the sense of panic has evaporated.  

China’s manufacturing PMI report for August rose to 51.7, from 51.4 in July, and dealers were anticipating a reading of 51.3. The increase in the expansion rate pushed copper to its highest level in nearly three years. The boost to the metals markets has pushed up the price of mining companies like Glencore, Anglo American, Rio Tinto and BHP Billiton.

Michael Saunders, of the Bank of England, called for higher interest rates, and stated UK growth is likely to be around 2%, but the remarks still couldn’t prevent the GBP/USD from falling. The rally in the euro and the rebound in the US dollar recently has been keeping the pound under the cosh.

The EUR/USD was nudged higher by the eurozone CPI data for August, which jumped to 1.5%, from 1.3%, and the consensus was for 1.4%.

We are anticipating the Dow Jones to open 41 points higher at 21,933, and we are calling the S&P 500 up 5 at 2462.

At 1.30pm, the US will reveal the latest initial jobless claims report and traders are expecting it to tick up to 237,000, from 234,000 last week. Yesterday’s ADP report was impressive and the non-farm payroll figure will be announced tomorrow.  

At the same time, the US will also announce the core personal consumption expenditures (PCE) figure, and economists are expecting it to drop to 1.4%, from 1.5%. PCE is the Federal Reserve’s preferred measure of inflation, and a tick lower could put renewed pressure on the US dollar.

Dollar General will announce their second-quarter figures today.   

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