US equities began the week on a softer note as stronger than expected manufacturing data suggested there is no imminent need for rate cuts.
United States
For March, the ISM manufacturing PMI report showed an expansion to 50.3, well above estimates of a more modest improvement to 48.4 from 47.8 previously. The report marks the first expansionary reading since September 2022, and notably, there was an increase in input costs to the highest level since July 2022, which points to price pressures in the coming months for consumers. Ahead for the week, several Fed policymakers will give speeches, most notably Fed Chair Jerome Powell on Wednesday. Investors will also be focused on the latest jobs report on Friday, expected to show 200k jobs were added in March and the unemployment rate remained stable at 3.9%.
ISM Manufacturing PMI (MoM)
In reaction to the stronger manufacturing PMI report, Treasury yields jumped across the curve. The 2-year rate rose 9.2 basis points to 4.711% with both the 10 and 30-year rates higher by 11.9 and 11.6 basis points respectively. The increase in yields mostly weighed on stocks, with the S&P500 down -0.20% along with the Dow Jones -0.6% and Russell 2000 -1.02% while the Nasdaq Composite edged up 0.11%.
Europe
European equities were closed on Monday for the Easter long weekend, finishing the latest trading session on Thursday higher with the Euro Stoxx 600 up 0.18%. Ahead this week, German inflation data for March is in focus tonight, followed by Eurozone inflation data on Wednesday. Expectations are for core prices to have moderated to 3% over the year, with headline inflation expected to remain unchanged at 2.6%. The latest minutes from the ECB will follow on Thursday, with Eurozone retail sales for February rounding off the week on Friday.
Australia
The ASX is expected to open higher this morning, with ASX200 futures up 1.03% or 81 points to 7,951 when the futures last traded on Thursday. For investors, the latest RBA policy minutes due at 11:30 AEDT this morning for clues as to the outlook for interest rates. Wednesday will bring the latest PMI reports for China, followed by Australian building permits for February on Thursday.
Commodities
Oil prices started the week on a positive note, with both WTI and Brent crude up 0.91% and 0.69% respectively to US$83.93 and US$87.60. Iron ore futures in Singapore at 1.2% higher this morning following a gain of 2.25% on Monday, currently traded at US$102.55 with copper also 1.17% higher. Gold is 0.74% higher at US$2,246 an oz along with silver 0.25% while Bitcoin is -1.81% lower at US$69,565.
Economic Calendar
2nd April 2024
Fed Cook Speech 09:50
RBA Policy Minutes 11:30
German Inflation (YoY Mar) 23:00
US Factory Orders 01:00
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
