Stocks Increase on Positive Manufacturing Data

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The USD dropped against most major currencies as a wave of positive manufacturing figures prompted investors to cash in on the USD and seek more risky higher yielding positions in stocks.
The PMI (purchasing manager’s index) reflects the acquisition of goods and services by purchasing managers and gives an indication as to the overall health of the manufacturing sector. In the Eurozone the PMI increased from December’s figure of 46.9 to 48.8 in January, showing a return to growth for Germany. There were also increases in the PMI recorded in China, the UK whilst in the US the manufacturing price index exceeded expectations by increasing to 55.5 from 47.5.
The positive data helped push stock markets higher in Asian trading as the Dow Jones increased 0.66%, settling at 12716.46, the Nasdaq posted a 1.22% increase, trading at 2848.27, whilst the Japan NI225 was up 0.76%, trading at 8876.82.
In the currency markets, the USD took a bit of a dive with falls in the Cable (GBP/USD), up 0.09% trading at 1.5847 and in the EUR/USD with the EUR up 0.21%, trading at 1.3187. The selloff in the USD, sparked by healthy manufacturing reports worldwide also saw a rise in the AUD, as Australia’s trade surplus rose to 1.71 billion AUD, much wider than the forecasted1.20 billion surplus, further bolstering the Aussie. The AUD/USD was up 0.28%, trading at 1.0736
Today at 2.30pm GMT, the unemployment claims will be released in the US. Investors should keep an eye on this as analysts are expecting a fall from 377,000 down to 373,000. Positive data in this lagging indicator could spark a move back into the USD, whilst Fed Chairman Ben Bernanke is due to speak at 4pm GMT today which again should be monitored as comments and statements from key policy makers generally spark market volatility.

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