A bounce back in China’s economy in March supported industrial commodities and European shares in overnight trading, despite five major UK banks complying with the regulator’s request to cut dividends. A positive outlook from the World Health Organisation also lifted sentiment. However US shares gave up early gains to finish in the red, and Asia Pacific markets are looking at a mixed start to the month and the quarter.
Oil prices stabilised and copper ripped 3.8% higher after official PMIs released yesterday showed both manufacturing and non-manufacturing activity expanded in March after February’s slump. The expansion is both a positive for the world’s second largest economy and evidence that a rebound after containment is possible.
Positive trading in Europe ensued. Stock indices in Britain, Spain and Sweden posted gains of around 2%. The lift came despite major lenders in the UK agreeing to cut 7.5 billion pounds of dividends due over the next two months, and pay no dividends in 2020. UK financial shares fell, but a 7% lift in energy stocks buoyed the market.
The growth positive moves fizzled around the mid-point of US trading. After an initial 0.5% rise, the S&P 500 dropped to a 1.6% loss and bonds rallied. Gold added to the mixed market messages with a 1.4% tumble, but currencies largely held ground.
Futures are pointing to falls in China and Japan. Australian futures are 1.4% higher after yesterday’s punishing reversal to loss. Caixin PMIs could be highly influential today, especially if they confirm the official reads. Due around mid-session, Manufacturing is expected to rebound to 45.0 from February’s 40.3, and services to lift to 39.0 from 26.6.