Manufacturing Data Give Big Boost to World Stocks
World stocks rallied strongly Thursday after strong manufacturing data encouraged hopes that the global recovery from recession is gaining traction — a day ahead of key U.S. jobs data that could set the tone in the markets next week when many investors return from the Easter break.
In Europe, the FTSE 100 index of leading British shares was up 59.77 points, or 1.1 percent, at 5,739.41 while Germany’s DAX rose 79.96 points, or 1.3 percent, to 6,233.51. The CAC-40 in France was 61.59 points, or 1.6 percent, higher at 4,035.60.
On Wall Street, the Dow Jones industrial average was up 91.30 points, or 0.8 percent, at 10,947.93 soon after the open while the broader Standard & Poor’s 500 index rose 11.33 points, or 1 percent, at 1,180.76.
The rise in the markets came as manufacturing data from around the world reinforced optimism about the global economic recovery. Surveys for the eurozone, Britain and China all outperformed expectations.
The monthly survey from the Institute for Supply Management came last and certainly did not disappoint. Its main purchasing managers’ index — a broad gauge of business activity — spiked to 59.6 in March, way above February’s 56.5 and analysts’ expectations for a more modest rise to 57.
Any reading above 50 indicates expansion and March’s figure suggests that the manufacturing sector in the world’s largest economy is growing at its fastest rate since July 2004.
In Japan, the world’s second largest economy, the recovery also appears to be pushing ahead. The closely watched Tankan report showed companies’ confidence rose for a fourth straight quarter — in fact, it was the most upbeat Tankan survey since before Lehman Brothers’ collapse in September 2008.
The upbeat data have helped rein in the concerns stoked Wednesday by a disappointing U.S. jobs survey from the private payrolls firm ADP, which suggested that official government figures Friday will come in below expectations
Traditionally, the nonfarm payrolls data set the market tone for a week or two but this month’s figures will be released as many traders head off for the Easter break. All major stock indexes in Europe and the U.S. are closed for Good Friday, suggesting that most of the initial reaction to the payrolls data will be seen in the currency markets.
Before the ADP report, the consensus in the markets was for a net gain in payrolls of around 170,000 jobs in March, but analysts are now less confident that the U.S. economy created that many jobs.
Investors have further U.S. jobs data to digest later Thursday — weekly jobless claims and a survey from the Challenger job-placement firm — before Friday’s main report.
Anthony Grech, market strategist at IG Index, said solid payrolls figures on Friday would “draw a neat line under an impressive first quarter, while a worse than expected number may shake sentiment.”
However, before then, trading volumes are expected to wind down in the run-up to the Easter break.
By mid afternoon London time, the euro was 0.1 percent lower at $1.3499 while the dollar rose 0.6 percent to 93.95 yen.
Earlier in Asia, Japan’s benchmark Nikkei 225 stock average gained 154.46 points, or 1.4 percent, to 11,244.40, while Hong Kong’s market index rose 1.4 percent to 21,537.00 and South Korea’s Kospi benchmark was up 1.6 percent at 1,719.17.
Elsewhere, China’s Shanghai market rose 1.2 percent and Australia’s index gained 0.7 percent.
The benchmark oil contract added $1.12 to $84.74 a barrel.
PAN PYLAS, AP Business Writer LONDON