The Monday Market Minute

  • Global stocks gain as China records the strongest reading of manufacturing activity in eight months in March, raising hopes that Beijing's stimulus plans can support the world's second-largest economy.
  • Weaker factory activity readings in Japan and Germany cap gains, however, as trade war concerns linger ahead of this week's visit to Washington by China' Vice Premier Liu He.
  • U.K. lawmakers attempt to find a way through the crippling Brexit crisis Monday after rejecting Prime Minister Theresa May's Withdrawal Agreement for a third time, setting up a hard exit from the European Union on April 12.
  • U.S. equity futures suggest a solid open on Wall Street following the strongest quarterly start since 2009 and ahead of key retail sales data for February at 8:30 am Eastern Time.

Market Snapshot

Global stocks rebounded firmly Monday, boosted by the strongest reading of manufacturing output in China in at least eight months and further suggestions of trade talk progress between Washington and Beijing, although gains were capped by weaker factory output readings across Europe in Japan.

China's manufacturing activity, however, bounced above the 50 mark that separates growth from contraction for the first time in four months in March, according to the private Caixin PMI reading, suggesting Beijing's planned $300 billion in spending and tax cuts is starting to arrest output declines linked to the month's long trade war with the United States.

President Donald Trump said Friday that talks in Beijing with Treasury Secretary Steve Mnuchin and Trade Representative Robert Lighthizer had gone "very well", but stressed to reporters at the White House that he wouldn't accept anything less than a "great deal" in the near term. 

China's stronger reading, however, was offset by weakness in other major economies, with output in Japan's manufacturing sector falling the most in three years, and business sentiment slumping to a two-year low. Germany's powerful manufacturing sector, Europe's largest, recorded the weakest final PMI reading in nearly seven years while the broader Eurozone tally slipped to 47.5, the lowest since April 2013.

Still, U.S. stocks look set to extend gain from the strongest quarterly start since 2009, with contracts tied to the Dow Jones Industrial Average indicating a 168 point advance and those linked to the S&P 500, which has gained just over 13% so far this year, suggesting a 16.5 point gain to open the second quarter.

Facebook Inc. (FB) - Get Report shares were indicated higher in pre-market trading Monday following a weekend editorial from founder and CEO Mark Zuckerberg that called for a larger government rule in policing the internet amid reports the social media group faces a multi-billion dollar fine over its privacy failures.

European stocks, which are up just over 12.2% so far this year, gained around 0.71% by mid-day trading as investors looked past the weaker PMI data and focused on both the stronger China numbers and the hope of a near-term trade deal between Washington and Beijing.

Stocks were also supported by a weaker euro, which eased to 1.1231 against the U.S. dollar after a weaker-than-expected estimate of March inflation for the Eurozone, which came in at 1.4%, suggested the European Central Bank may have to take an even lighter stance on forward rate guidance in the months ahead.

Britain's FTSE 100 jumped 0.6% in London, meanwhile, as the pound edged modestly higher to 1.3100 against the U.S. dollar and basis resource and energy stocks rose to the top of the leaderboard.

The pound is likely to remain volatile today, however, as lawmakers meet in London an attempt to find a way through what has becoming a simmering constitutional crisis following Friday's rejection of Prime Minister Theresa May's Brexit agreement at the third time of asking.

May called the vote, which saw her defeat narrow to 58 votes from a prior count of 149 earlier last month, "a matter of profound regret." Opposition leader Jeremy Corbyn, as well as the Scottish National Party, urged her to call a general election to break the nation's crippling Brexit stalemate.

Britain now has until April 12 to either crash out of the EU without a bespoke arrangement or request a longer, perhaps multi-year deadline extension from Brussels.

Away from equities, global government bond yields edged higher in early European hours, with benchmark 10-year bunds still trading in negative territory but showing modest improvement at -0.04% while 10-year U.S. Treasury notes rose to 2.444%, a move that puts a positive slope on the yield curve from 3 month bills of around 4 basis points.

Global oil prices extended gains from their best quarter in a decade Monday as investors factored in a flat U.S. dollar, OPEC production cuts, sanctions on the sale of Venezuelan crude and stronger demand from China over Friday's modest decline in domestic U.S. output rates reported by the Energy Information Administration.

Brent crude contracts for May delivery, the global benchmark for oil prices, were marked 82 cents higher from their Friday close in New York and changing hands at $68.40 per barrel in early European dealing while WTI contracts for the same month were seen 51 cents higher at $60.65 per barrel.

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