Global stocks get boost from manufacturing data, U.S. dollar bounces

NEW YORK (Reuters) – A gauge of global stocks kicked off September on a higher note on Tuesday, as data in major economies showed manufacturing demand rebounding from coronavirus-restricted lows, while the U.S. dollar bounced off its lowest in more than two years.

In the United States, stocks added to gains after two measures of manufacturing activity indicated expansion, with the reading from the Institute for Supply Management hitting its highest level in nearly two years.

Factory activity in China expanded at the fastest rate in nearly a decade in August, a private PMI survey showed on Tuesday, boosting market sentiment overnight and at the European open.

Euro zone manufacturing activity also grew last month to stay on a path toward recovery, though factory managers remained wary about investing and hiring more workers.

“We are just getting bombarded by a steady stream of data which shows almost every day the degree by which the global economy is bouncing,” said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis.

The Dow Jones Industrial Average rose 84.5 points, or 0.3%, to 28,514.55, the S&P 500 gained 15.2 points, or 0.43%, to 3,515.51 and the Nasdaq Composite added 145.05 points, or 1.23%, to 11,920.51.

The gains pushed the S&P 500 and Nasdaq to intraday records.

The rebound in manufacturing can be partly attributed to massive monetary and fiscal stimulus programs implemented across the globe to support economies battered by the coronavirus pandemic.

But not all data was upbeat and European stocks reversed course to close lower for a fourth straight session after Germany cut its GDP forecast for 2021 and a reading on inflation for the bloc turned negative for the first time in more than four years.

The pan-European STOXX 600 index lost 0.35%, while MSCI’s gauge of stocks across the globe gained 0.35%.

The dollar remained weak against a basket of major currencies despite the optimistic data, falling to its lowest level since late April 2018 at 91.737. The greenback has dropped about 1% since Federal Reserve Chair Jerome Powell on Thursday said the U.S. central bank was shifting to average inflation targeting.

For a graphic on Dollar’s dive in 2020 Dollar’s dive in 2020:


But the dollar found some strength after comments from Fed Governor Lael Brainard, who said on Tuesday the central bank will need to introduce new details in the coming months to help the economy surpass the coronavirus impact and fulfill the new plan of stronger job growth and higher inflation.

The dollar index rose 0.138%, with the euro down 0.19% to $1.1913.

Earlier in the session the euro climbed above $1.20 for the first time since May 2018.

Benchmark 10-year U.S. Treasury notes last rose 5/32 in price to yield 0.677%, from 0.693% late on Monday.

Oil prices reversed overnight losses, boosted by the manufacturing data and forecasts for a sixth weekly draw-down in U.S. crude inventories.”

U.S. crude rose 0.84% to $42.97 per barrel and Brent was at $45.73, up 0.99% on the day.

For a graphic on 2020 Global asset performance:


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