Opening Bell: Chinese Data Comeback Powers Global Rally, 5-Month High In Oil

Key Events

European shares and futures on the S&P 500, Dow and NASDAQ 100 followed Asian stocks into a robust rally this morning, while 10-year Treasurys dropped, after data showing a pick up in China manufacturing activity eased concerns of a global slowdown. Expectations of some diplomatic breakthrough in the upcoming round of U.S.-China meetings in Washington later this week also boosted market sentiment.

All major Asian benchmarks closed markedly in the green, resuming their most substantial quarterly gains since 2012. China’s Shanghai Composite surged 2.58% and Hong Kong’s Hang Seng added another 1.76% after both the Caixin and the NBS manufacturing PMIs smashed estimates, prompting hopeful investors to pile up on local shares on speculations of a bottom in the country’s economy.

Japan’s TOPIX sealed a 1.52% climb and South Korea’s KOSPI gained 1.29%. Australia’s S&P/ASX 200 edged 0.59% higher, while India’s S&P/BSE Sensex is on track for a new record high after ticking 0.54% higher.

Global Financial Affairs

Investors rotated into risk assets, sending safe-haven Treasurys, yen and gold lower. A weakening gold price sends a very bullish signal, considering it occurs alongside a decline in the dollar—which in turn is pressured down by sliding Treasurys, as foreign buyers repatriate capital.

Overall, global stocks are testing the waters for bringing their Q1 gains into the second quarter, counting on the world's central banks to lay out more accommodation to support earnings growth.

However, while the current rally already pared most of the losses shares suffered in the fourth quarter, yields languish at multi-year lows, suggesting the outlook for a slowdown is still on the cards. While upbeat Chinese data eased some concerns, eyes will be on the U.S. jobs report this Friday to jibe with these positive readings.

Turkish lira 5-Min Chart

In FX trading, The Turkish lira tumbled as early local election results suggested President Recep Tayyip Erdogan’s popularity is slipping—though it later attempted to crawl higher. The pound gained ground even as an ongoing impasse over Brexit increases the potential of general election in the U.K.—for the third time in just four years.

In commodities, the relief coming from stronger Chinese figures helped the price of WTI reach its highest level since Nov. 8. Some analysts warned oil's Q1 32% surge may be a tough act to follow.

Up Ahead

• The U.K. Parliament will resume "indicative votes" today on Brexit proposals alternative to the draft put forward by Prime Minister Theresa May.

• Canadian RBC Manufacturing PMI for March is released Monday.

• Bank of Canada Governor Stephen Poloz speaks Monday.

• The Reserve Bank of Australia decides on monetary policy on Tuesday, at a time of falling growth forecasts. The country's federal budget wile published later in the evening.
• Vice Premier Liu He leads China's delegation to Washington on Wednesday, days after U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer traveled to Beijing.
• The monthly U.S. jobs report on Friday is projected to show nonfarm payrolls were up 175,000 in March. Economists think the jobless rate held at 3.8 % with hourly earnings growing at a strong rate.

Market Moves

Currencies

• The Canadian loonie was down 0.12 percent against the U.S. greenback early Monday, trading at 0.7483.

• The yen slipped 0.2% to 111.11 per dollar.
• The offshore yuan added 0.1% to 6.7094 per dollar.
• The euro was at $1.1236, up 0.2%.
• The British pound was little changed at $1.3029.
• The Australian dollar rose 0.4% to 71.23 U.S. cents.

Bonds

• Canada’s 10-year yield was up early Monday at 1.655, a 2.35-percent increase.

• The yield on 10-year Treasurys rose about three basis points to 2.43%.
• Australia’s 10-year yield climbed about four basis points to 1.82%.

Commodities

• West Texas Intermediate crude rose 0.6% to $60.51 a barrel.
• Gold held at $1,293.09 an ounce.