US equities traded lower and oil prices were mixed yesterday after surveys showed US and Chinese manufacturing in March expanded less than economists had expected.
Major European markets were closed for Easter Monday, while several exchanges were shut in Asia, reducing trading activity.
The drop in US stocks comes after the S&P 500 closed at a record high on Thursday. The S&P 500 rose 10 per cent from January through March, its strongest quarter in a year. The Dow gained 11.3 per cent and the Nasdaq 8.2 per cent during the span.
The pace of growth in US manufacturing unexpectedly slowed last month, the Institute for Supply Management said. ISM said its index of national factory activity fell to 51.3 from 54.2 in February. The reading was shy of expectations, according to a Reuters poll of economists.
China’s official purchasing managers index for March came in at 50.9, the highest in 11 months, although a Reuters poll showed economists had expected a rise to 52.0 from February’s five-month low of 50.1.
US Treasuries rebounded after the ISM report on US manufacturing, gold prices traded near break-even and the euro extended gains versus the US dollar.
“The weaker-than-expected ISM manufacturing report was really the big bullish trigger for today’s session,” said Ian Lyngen, a senior government bond strategist at CRT Capital Group in Stamford, Connecticut.
The benchmark 10-year US Treasury note was up 3/32 in price to yield 1.84 per cent.
Early gains in bullion faded after the ISM report and as investors waited for the Labour Department’s snapshot of the US job market on Friday.
Economists expect US nonfarm payrolls to increase 200,000 in March after February’s impressive 236,000 gain.
“I’m not expecting much to happen in markets before the payroll report, but with things that quiet, we could be more vulnerable to any surprise external news,” said Dan Veru, chief investment officer at Palisade Capital Management LLC in Fort Lee, New Jersey. The Dow Jones industrial average was down 19.21 points, or 0.13 per cent, at 14,559.33. The Standard & Poor’s 500 Index was down 6.87 points, or 0.44 per cent, at 1,562.32. The Nasdaq Composite Index was down 24.90 points, or 0.76 per cent, at 3,242.62.
MSCI’s all-country world equity index fell 0.42 per cent to 358.53.
New orders rose sharply in China, suggesting the underlying economic recovery is strong enough to weather any risks from patchy export performance.
In oil markets, Brent crude fell after the Chinese manufacturing data and stayed down after release of the US survey on American factory activity but later rebounded.
“China’s still growing, and that continues to be an underlying support factor long term for the market. Whether they are at six per cent or seven per cent, they are growing,” said Carl Larry, president of Houston-based Oil Outlooks and Opinion, about Chinese manufacturing.
Brent for May delivery was up $1.13 at $111.15 a barrel, while US light sweet crude oil settle down 16 cents at $97.07 a barrel. (Reuters)