market relief

European equity markets followed on from the positive move in Asia overnight, even the US index futures are already pointing to a stronger open in New York as traders around the world adopt a risk-on stance.

The positive moves in the pound or the single currency hasn’t dented stock markets in Europe, as trader’s willingness to take on risk overrides it.

The Caixin survey of Chinese manufacturing for July came in at 51.1, and that topped the expectations of 50.5, and it was an improvement on June’s reading of 50.4. Yesterday, the official figures from Beijing showed the manufacturing sector grew at a slower pace in July. Traders tend to put more weight in the Caixin survey because they feel it is more impartial.

Despite the encouraging manufacturing numbers from China, the decline in copper today has weighed on the share price of BHP Billiton and Anglo American. Yesterday the red metal hit a level not seen for over two years, and in light of the Caixin survey, we could see fresh buying of the metal and mining companies.

BP shares are higher on the day after the oil giant posted a profit that exceeded estimates. Upstream production jumped by 10%, which is good to see as the company has been asset stripping to raise funds to cover the cost of the Deepater Horizon disaster. Since the energy market is relatively weak, the company has become more selective in in projects, and it incurred a $750 million charge because it exited an operation in Angola.

The EUR/USD has pushed above $1.18 as a soft US dollar in the past 24 hours has helped the single currency. Even though the number from the eruozone today weren’t amazing, they showed the manufacturing sector is still expanding. Eurozone manufacturing in July slipped to 56.6 from 57.4 in June. The region grew by 0.6% in the second-quarter on a quarter-on-quarter basis and by 2.1% on a year-on-year basis.

The GBP/USD is above $1.32, and it is at its highest level since September 2016. The poor run by the greenback is assisting the pound, and the better than expected manufacturing figures from the UK today also helped sterling’s strength.

We are anticipating the Dow Jones to open 120 points higher at 22,011, and we are calling the S&P 500 up nine at 2479.

At 3pm, the US will post the ISM manufacturing PMI report for July, and traders are expecting a reading of 56.5, which would be down from 57.8 in June.

Apple will report their third-quarter figures tonight.

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