The European markets look set to open higher on Thursday, tracking firm Asian markets as investors took weak data out of China and Japan in their stride.
Business conditions in Japan worsened during the third quarter, confirming a loss of economic momentum but bolstering expectations the Bank of Japan would ease its policy further at its October 30 policy meeting.
The final Caixin China General Manufacturing PMI remained at a six and a half year low in September, but the score was better than the preliminary reading of 47 released last week. While China’s official factory gauge stabilized around a three-year low on the back of government stimulus and infrastructure investment, the Caixin China services PMI fell to a 14-month low of 50.5 in September from 51.5 in August.
Markets in China and Hong Kong are closed today for a national holiday, but the rest of Asia traded higher, led by Australia, Japan, South Korea and Taiwan on expectations Beijing will roll out more fiscal and monetary stimulus measures to stabilize the economy.
The dollar firmed up slightly as Chinese PMI figures came in slightly better than estimates. Crude futures edged up in Asian deals and base metal prices also strengthened, while gold held near its lowest level in two weeks on U.S. rate hike worries.
After upbeat private sector jobs data, investors await U.S. reports on weekly jobless claims, manufacturing activity and construction spending later in the day for further clarity on the Fed’s policy stance. Also, Federal Reserve Bank of San Francisco President John Williams is expected to speak about the economic outlook in Salt Lake City, U.S. at 2.30 pm ET.
Closer home, investors await PMI reports from major European economies for further direction. European Central Bank chief Mario Draghi will deliver a speech in Washington at 9.30 am ET and investors wait to hear further about QE to help ward off deflation in the region and keep the economy on track.
International Monetary Fund Managing Director Christine Lagarde predicted moderate growth in advanced economies this year but said global growth will be disappointing and uneven amid the twin prospects of rising U.S. interest rates and slowing expansion in China. Separately, multilateral body WTO has slashed its forecast for global commerce this year, citing falling import demand and lower commodity prices in the global market.
In corporate news, Novartis announced that results from the pivotal Phase III FUTURE 1 study for secukinumab in psoriatic arthritis were published online in the New England Journal of Medicine.
Spanish oil major Repsol S.A. has agreed with Natural Gas Distribution and Redexis Gas for the sale of part of its piped gas business.
ING Group has agreed to sell 40 million shares of NN Group at a price of 25.00 euros per share.
The European markets rebounded from a two-day sell-off on Wednesday as Glencore vigorously defended its solvency and the euro area’s inflation turned negative again in September, raising pressure on the European Central Bank to expand its monetary stimulus. The German DAX jumped 2.2 percent, while the U.K.’s FTSE 100 and France’s CAC 40 index both shot up by 2.6 percent.
U.S. stocks rose sharply overnight as investors chased bargains in beaten-down stocks and upbeat ADP report on private sector employment fueled hopes for a strong reading in the government’s payrolls report due Friday. Investors shrugged off another report showing an unexpected contraction in Chicago-area business activity. The Dow rallied 1.5 percent, the tech-heavy Nasdaq soared 2.3 percent and the S&P 500 advanced 1.9 percent.