Some of these gains were due to supply disruptions and geopolitical tensions, but they also reflect optimism about global growth given a recovery in recent factory surveys (PMI), especially for China
Asian shares rallied on Thursday as U.S. rate cuts remained on the cards, even if their timing was not clear, while the yen slipped against peers except the dollar and bolstered Japanese stocks.
There was also action in commodities as gold touched another record, oil a five-month high and copper a 13-month peak, helping to raise shares in basic materials and energy firms.
Some of these gains were due to supply disruptions and geopolitical tensions, but they also reflect optimism about global growth given a recovery in recent factory surveys (PMI), especially for China.
Steady improvement in manufacturing surveys throughout last quarter point to momentum improving broadly in the coming months, JPMorgan analysts stated in a note.
The global manufacturing output PMI moved further into expansionary territory in March, reflecting largely positive results across the major economies, the analysts said. Global business confidence is on the mend.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.4%, though a holiday in China made for thinner trading conditions.
Tokyo’s Nikkei rose 1.6% as the yen dropped, with the materials, industrials, and energy sectors leading the way.
EUROSTOXX 50 futures and FTSE futures both advanced 0.1%. S&P 500 futures added 0.3% and Nasdaq futures 0.4%.
Sentiment was aided by a reaffirmation from Fed Chair Jerome Powell that U.S. rates were still on course to be cut this year, though the timing was data dependent.
The case for easing was underpinned by a survey of the U.S. services sector that showed its index of prices paid dropped to the lowest since March 2020, offsetting a worrying increase in the survey of manufacturing released early this week.
That also outweighed a surprisingly strong ADP report, which showed private sector jobs increased 184,000.
While this series has a patchy correlation to the official payrolls report due on Friday, it was strong enough for Goldman Sachs to revise up its prediction for payrolls by 25,000 to a strong 240,000.
Such an outcome would top the median forecast of 200,000 and could lead markets to again pare the probability of a June rate cut.
