Thursday, 2 December 2010

Stocks jump as global manufacturing expands

Markets had a strong showing on Wednesday. From Bloomberg:

Stocks jumped, sending U.S. benchmark indexes to their biggest gains in three months, while the euro and commodities rallied and Treasuries slid amid improving data on the American and Chinese economies and speculation of a larger effort to end Europe’s debt crisis.

The S&P 500 gained 2.2 percent, the most since Sept. 1, as 483 of its stocks advanced as of 4 p.m. in New York. The MSCI Emerging Markets Index jumped 2.2 percent for its biggest gain since Aug. 2. The euro rebounded above $1.31 and Spanish 10-year bonds snapped an 11-day drop, while the rate on 10-year Treasury notes increased 17 basis points to a four-month high of 2.97 percent. Oil and copper advanced more than 3 percent.

Economic data certainly helped markets. Bloomberg reports the US data:

Manufacturing in the U.S. expanded for a 16th consecutive month in November and companies increased payrolls, signs of growing confidence in the economic recovery.

The Institute for Supply Management said its factory index was little changed at 56.6 after a five-month high of 56.9 in October. A reading higher than 50 signals growth. Businesses added 93,000 workers to payrolls in November, the most in three years, according to ADP Employer Services...

The Federal Reserve said today the economy gained strength in 10 of 12 districts as hiring improved, manufacturing expanded and retailers anticipated a stronger holiday shopping season...

A Commerce Department report today showed construction spending unexpectedly increased in October, lifted by the biggest gain in residential projects in six months. The 0.7 percent increase matched the previous months’ gain.

Manufacturing also saw expansion in the euro area, according to another Bloomberg report.

Europe’s manufacturing industries expanded at the fastest pace in four months in November, led by Germany, the region’s largest economy.

A gauge of manufacturing in the 16-nation euro area rose to 55.3 from 54.6 in the previous month, London-based Markit Economics said today. It had previously reported an increase to 55.5 in November. A reading above 50 indicates expansion.

Manufacturing did even better in the UK in November, as Reuters reports.

Manufacturing activity accelerated unexpectedly to a 16-year high in November and employment climbed at a record pace, according to a survey on Wednesday that pointed to a surprisingly robust recovery in the industrial sector.

The Markit/CIPS headline manufacturing Purchasing Managers' Index (PMI) rose to 58.0 in November, its highest since September 1994, and well above October's upwardly revised figure of 55.4. Economists had forecast a modest easing to 54.6.

And while manufacturing continued to grow strongly in countries like China and India in November, other Asian countries saw turnarounds in manufacturing activity. AFP/CNA reports:

China's factories led a strong pick-up in manufacturing activity across Asia in November, surveys showed Wednesday, but soaring raw material costs fuelled expectations for more interest rate hikes...

The HSBC China Manufacturing PMI, or purchasing managers index, rose to 55.3 in November from 54.8 in October.

An official survey released by the China Federation of Logistics and Purchasing (CLFP) also rose to 55.2 in November from 54.7 in October...

In South Korea, the HSBC PMI jumped to 50.23 from October's 20-month low of 46.75, ending six months of contraction.

Taiwanese manufacturing expanded for the first time in four months, with the HSBC PMI rising to 51.7 from 48.6.

In India, manufacturing activity expanded for the 20th straight month in November, rising to 58.4 from 57.2 in October.

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