U.S. stock futures climbed on Monday, the first day of the new quarter, after better-than-expected China manufacturing data calmed some lingering concerns about momentum for the world’s second biggest economy.
How did the benchmarks fare?
Dow Jones Industrial Average futures YMM9, +0.61% jumped 164 points, or 0.6%, 26,095, while S&P 500 futures ESM9, +0.61% climbed 18.45 points, or 0.6%, to 2,856.25. Nasdaq-100 NQM9, +0.95% gained 74.75 points, or 1%, to 7,475.25.
On Friday, the Dow DJIA, +0.82% rose 211.22 points, or 0.8%, to 25,928.68, while the S&P 500 index SPX, +0.67% gained 0.7% to 2,834.40. The Nasdaq Composite Index COMP, +0.78% advanced 0.8% to 7,729.32. DJIA, +0.82%
The S&P 500 closed out the week with a 1.2% gain, a 1.8% monthly rise and a first-quarter advance of 13.1%, the best quarterly performance since the third quarter of 2009.
What’s driving the market?
The Caixin China manufacturing purchasing managers index rose to 50.8 in March from 49.9 in February, rebounding to expansionary territory for the first time in four months. Gains for the private gauge came on the heels of China’s official manufacturing PMI released on Sunday, which rose to a six-month high of 50.5 in March from 49.2 in February.
Concerns over the global economy have dogged investors in recent months, and the upbeat economic news from China rallied perceived riskier assets such as stocks, with the Shanghai Composite SHCOMP, +2.40% gaining more than 2%.
Investors will all get important updates on the U.S. economy this week, after a lousy start to the year, with March employment due at the end of the week. Just 20,000 new jobs were created in February and Wall Street is hoping for a rebound.
Monday’s data calendar is packed, with retail sales data for February due at 8:30 a.m. Eastern Time, the final Markit purchasing managers index for March at 9:45 a.m. Eastern, and the March Institute for Supply Management index at 10 a.m. Eastern, along with February construction spending and January business inventories.
Read: Why the markets aren’t buying the Fed’s claims about the strength of the U.S. economy
Friday’s bullish session for stocks and end to the first quarter was partly driven by fresh hopes for a trade deal between the U.S. and China, after Treasury Secretary Steven Mnuchin tweeted that “constructive” discussions between China’s trade envoy and U.S. officials.
On Sunday, China’s State Council said it would suspend additional tariffs on U.S. autos and auto parts, in a bid to help “create a good atmosphere for the ongoing trade negotiations between both sides,” according to Reuters. Talks will resume in Washington this week, with a Chinese delegation led by Vice Premier Liu He.
What are strategists saying?
“We believe we will continue see a rebound in Q2 [China] data, that tends to correlate with commodity prices, and we have seen higher prices for both metals and oil this year,” said analysts at Danske Bank, in a note to clients. “Hence, the PMIs are encouraging. We also expect further monetary easing to add to the stimulus and thus support activity in Q2.”
How are other markets trading?
Apart from hefty gains for China stocks, the rest of Asian markets rose, with the Nikkei 225 index NIK, +1.43% rose 1.4%, while Korea’s KOSPI index SEU, +1.32% rose 1.4%. European stock futures also pointed higher.
U.S. crude prices CLK9, +0.63% added 0.8%, while gold GCM9, -0.28% eased up, and the ICE Dollar Index DXY, -0.08% also fell.
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