According to Bloomberg, industrial metals led commodities to their first gain in more than a week after China’s official factory gauge unexpectedly rose to the highest since 2014. Chinese shares in Hong Kong climbed to a two-week high, miners rebounded in Europe and S&P 500 Index futures signaled a two-day slump in U.S. stocks will end. The dollar gained against most of its peers, while the pound rallied 0.8 percent after manufacturing bounced back from a post-Brexit slump.
Signs that China’s economic slowdown is abating may bolster demand for riskier assets, while a rebound in U.K. factory activity helped ease concern that Britain’s vote to leave European Union will strangle growth. U.S. payrolls data due Friday could provide clues as to whether that policy tightening will come sooner rather than later, with a private jobs report out Wednesday having shown steady growth in the labor market.
“The global economy is doing better than a lot of people gave it credit for,” said Teis Knuthsen, chief investment officer at Saxo Bank A/S’s private-banking unit in Hellerup, Denmark. “Brexit was by no means a catastrophe, the Fed has finally acknowledged that the U.S. economy is doing better than expected, and China hasn’t spiralled into some kind of mayhem. It’s starting to feel like a risk-on market.”
Stocks
The Stoxx Europe 600 Index added 0.9 percent at 10:05 a.m. in London, with trading volumes 27 percent higher than the 30-day average. Glencore Plc and Rio Tinto Group rose at least 1.3 percent, while HSBC Holdings Inc. and Banco Santander climbed more than 2 percent.
Pernod Ricard SA advanced 2.3 percent after forecasting profit growth for the current fiscal year. Elekta AB gained 2.9 percent after the Swedish maker of medical devices posted better-than-expected quarterly earnings.
S&P 500 Index futures rose 0.3 percent, indicating equities will bounce back from Wednesday 0.2 percent decline. Salesforce.com Inc. slid 6.8 percent in early New York trading after forecasting fiscal third-quarter revenue that may fall short of some analysts’ estimates.
In Hong Kong, Wynn Macau Ltd. and Galaxy Entertainment Group Ltd. jumped more than 5 percent after Macau reported its first increase in monthly gaming revenue in more than two years. The Hang Seng China Enterprises Index -- last month’s best-performing stock measure globally -- rose 0.7 percent.
"The PMI data was positive for China’s risky assets,” said Tim Condon, head of Asian research at ING Groep NV in Singapore. Even so, investors are ”cautious about a September rate hike and tomorrow’s payrolls report could push the Fed to follow through.”
Commodities
The Bloomberg Commodity Index gained 0.2 percent. Copper gained 0.4 percent in London, extending the last session’s rebound from a two-month low. Lead, nickel and zinc climbed 1 percent or more following the manufacturing data in China, the world’s biggest user of industrial metals. The nation’s official PMI rose to the highest level in almost two years.
“Today’s PMI data is a good surprise,” said Wei Lai, an analyst with Cofco Futures Ltd. in Shanghai. “It will initiate strong expectations for demand in the autumn and metals will be supported at least over the coming two months.”
Crude oil rose 0.4 percent to $44.86 a barrel in New York after Saudi Arabia pledged not to boost output to capacity as OPEC members plan to meet this month to discuss action to support the market. The price tumbled 3.6 percent on Wednesday as a report showed U.S. inventories increased by 2.28 million barrels last week, keeping supplies at the highest seasonal level in almost three decades.
Currencies
The pound surged to $1.3264. IHS Markit said its Purchasing Managers Index, which dropped below the key 50 level in July, jumped by a record to 53.3. That was far better than economists had forecast; the median estimate in a Bloomberg survey was for a reading of 49. New orders rose, with sterling’s recent drop “by far the main factor” for the improvement in exports, Markit said.
Fed Vice Chairman Stanley Fischer indicated last week that a U.S. interest-rate hike is possible in September and said Tuesday that the central bank would base its decision on economic data, putting added focus on the payrolls report.
The ringgit sank 0.7 percent after Wednesday’s drop in crude prices dimmed prospects for Malaysia, Asia’s only major net oil exporter. The Aussie strengthened 0.4 percent following the manufacturing figures for China, Australia’s biggest export market.
Bonds
The yield on 10-year U.S. Treasuries was little changed at 1.58 percent, after a 13 basis point jump in August that marked the biggest increase since June 2015.
Bill Gross, the billionaire manager of the Janus Global Unconstrained Bond Fund, recommends the Fed raises interest rates at the Sept. 20-21 policy meeting and again by the middle of next year. Futures are pricing in a 36 percent chance of a rate hike this month and a 47 percent chance of two quarter-percentage-point increases by the end of 2017.
U.S. employers are projected to have added 180,000 jobs in August, according to a Bloomberg survey, and Gross said a number of 150,000 or higher should be enough to provoke Fed tightening this month.
Panasonic Corp. raised 400 billion yen ($3.9 billion) in the biggest bond issuance by a non-financial company in Japan this year. The issuance included 200 billion yen of five-year notes at a yield of 0.19 percent, half the price it paid to issue debt of that tenor in March 2015.