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(Bloomberg) — The dollar dropped to a two-year low and U.S. futures climbed after Chinese manufacturing data indicated that exports are underpinning a recovery. European stocks pared gains amid a retreat in travel shares.
The euro led the charge against the greenback, hovering just below $1.20. Rolls-Royce Holdings Plc and Trainline Plc led losses in the Europe Stoxx 600 Index. The weaker dollar fueled a broad advance in commodities, with copper climbing past $6,800 a ton in London. Treasuries were little changed.
In Asia, China’s yuan touched the highest since 2019, while the MSCI AC Asia Pacific Index posted modest gains. Australian shares dropped to the lowest level since early August amid losses in financial shares.
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A private gauge of China’s factory activity grew at the fastest pace in August since January 2011, helped by improving exports and continued domestic recovery. The Caixin Manufacturing Purchasing Managers’ Index rose for the fourth consecutive month to 53.1 from July’s 52.8, beating the median estimate of 52.5.
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With global stocks up 6% in August and 10-year Treasury yields almost 20 basis points higher, traders have been betting on the global economy’s recovery from virus shutdowns and continuing gains in tech shares. Still, with U.S. infections ticking up and India becoming the world’s epicenter for new cases, the pandemic is far from over and investors will be scouring data this week for clues on the outlook.
“Following such a strong month and such a strong recovery since we saw the trough back in March, we do think we could see some turbulence over the next few months,” Tracie McMillion, head of global asset allocation strategy at Wells Fargo Investment Institute, said on Bloomberg Television. “We’re entering a seasonally weaker period, we’ve got elections on the horizon, and also we’re entering the fall and there could be some coronavirus escalation that also could start to worry market participants.”
Here are some key events to watch this week:
ISM manufacturing data is due Tuesday in the U.S.Australia GDP is due Wednesday.U.S. jobless claims for the week ended Aug. 29 are due Thursday.U.S. jobs report Friday is forecast to show payrolls continued to rebound in August from virus lows.
Here are the main market moves:
Stocks
Futures on the S&P 500 Index gained 0.5% as of 9:29 a.m. London time.The Stoxx Europe 600 Index climbed 0.1%.The MSCI Asia Pacific Index increased 0.4%.The MSCI Emerging Market Index gained 0.9%.
Currencies
The Bloomberg Dollar Spot Index sank 0.4%.The euro gained 0.4% to $1.1981.The British pound jumped 0.4% to $1.3429.The Japanese yen strengthened 0.2% to 105.65 per dollar.The offshore yuan strengthened 0.4% to 6.8233 per dollar.
Bonds
The yield on 10-year Treasuries rose one basis point to 0.72%.The yield on two-year Treasuries was unchanged at 0.13%.Germany’s 10-year yield gained one basis point to -0.39%.Britain’s 10-year yield jumped two basis points to 0.331%.Japan’s 10-year yield dipped less than one basis point to 0.047%.
Commodities
West Texas Intermediate crude rose 0.7% to $43.10 a barrel.Brent crude climbed 0.5% to $45.80 a barrel.Gold strengthened 1.2% to $1,990.44 an ounce.
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Video: Caixin data suggests China’s manufacturing recovery pace is ‘accelerating’: BofA Securities (CNBC)
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