Expansion in manufacturing around the globe helped markets maintain an overall pro-growth stance in overnight trading. However rising infection rates in Europe and the US raised concerns about further lockdown measures and dampened investor enthusiasm. The potential for further US stimulus lifted early US trading before trimming gains as negotiations between the major parties see-sawed.
Expansionary reads on manufacturing PMIs across the Northern Hemisphere added to recent positive indications from China. The US dollar weakened again, in a sign of overall confidence. However crude oil markets slumped as Covid inspired demand concerns exacerbated fears of potential oversupply as OPEC+ discipline breaks down. Reports that Madrid and New York may soon re-institute lockdown measures provided the trigger. New York reported a rise in daily infections to levels last seen in May.
The mixed messages lead to mixed market results. European shares managed modest gains, although the German DAX finished in the red after shares in agricultural and pharmaceutical giant Bayer plunged up to 13% on a profit warning. The US Dow index finished close to flat, but the Nasdaq rose almost 1.5% as investors piled back into a narrow group of major tech stocks. Copper defied crude’s plunge to post session gains, but gold, silver and bonds rose as some investors turned to havens. Cryptos edged lower overall, but Monero jumped more than 6%.
Asia Pacific traders are looking at a similarly mixed day, with intraday opportunities more likely at the micro rather than the macro level. Exchange issues in Japan may again affect trading that is already subdued by a week long holiday in mainland China. Japanese unemployment (forecast 3.0%, previous 2.9%) and Australian August retail sales (forecast -4.2%, previous +3.2%) may affect market performance, but the focus remains on tonight’s read of US September non-farm payrolls (forecast 880,000, previous 1,371,000).