Tuesday, 4 January 2011

Markets rise as manufacturing accelerates in US and euro area

Stocks and commodities started the year on a positive note. From Bloomberg:

Stocks rallied, sending the Standard & Poor’s 500 Index to its best gain in a month, and oil rose as growth in U.S. and European manufacturing bolstered speculation the economic recovery will strengthen. Treasuries slid.

The S&P 500 increased 1.1 percent to 1,271.87 at 4 p.m. in New York, its biggest gain since Dec. 2, and the Stoxx Europe 600 Index rose 0.8 percent for its largest advance since Dec. 21. Oil climbed to a 27-month high and copper touched a record near $4.50 a pound. The 10-year Treasury note fell, sending the yield five basis points higher.

Bloomberg reports the US economic data on Monday:

Manufacturing in the U.S. expanded in December at the fastest pace in seven months, reinforcing signs the expansion is gaining momentum.

The Institute for Supply Management’s index climbed to 57 last month from 56.6 in November, the Tempe, Arizona-based group said today. A reading greater than 50 points to expansion, and the figure matched the median forecast of economists surveyed by Bloomberg News...

Another report today showed construction spending rose in November for a third month, helped in part by federal government projects. A 0.4 percent gain followed a 0.7 percent increase in October, the Commerce Department said.

Bloomberg also reports an acceleration in manufacturing in the euro area.

Europe’s manufacturing industry grew more than initially estimated in December, powered by Germany’s export-led expansion.

A gauge of manufacturing in the euro area rose to 57.1 from 55.3 the previous month, London-based Markit Economics said today. That’s above the 56.8 reported earlier for December. A reading of more than 50 indicates expansion.

In China, the China Federation of Logistics and Purchasing reported on Monday that the non-manufacturing sector accelerated in December as its non-manufacturing purchasing managers' index rose to 56.5 from 53.2 in November. However, on Saturday, it had reported that its manufacturing PMI fell to 53.9 in December from 55.2 in November.

Another report last week had also shown that China's manufacturing sector is slowing, with HSBC's manufacturing PMI falling to a three-month low of 54.4 in December from 55.3 in November.

Also last week, another report showed that the Markit/JMMA Japan manufacturing PMI rose to 48.3 in December from 47.3 in November.

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