Morning Minutes

April Arrives with Strong Manufacturing PMI Reports




The first day of April and the last trading day of the week finds stock markets around the world shrugging off their recent malaise and starting to climb again. US index futures are all in the green this morning, led by NASDAQ futures up 0.9%, adding to yesterday’s 1.5% gain, while S&P futures are up 0.3%. Overseas markets have been climbing overnight with the Hang Seng soaring 2.0%, the Nikkei rising 0.7%, and major European indices adding 0.3%-0.5%.

With the US 10-year treasury note yield levelling off, in the 1.70%-1.75% range, investors appear to have turned their focus to economic news. Last night President Biden unveiled an 8-year, $2.1 Trillion infrastructure package which includes spending on transportation, water, manufacturing, broadband wireless, schools, housing, and electric vehicle refueling infrastructure. The president also announced a corporate tax increase, clawing back about half of the 2017 tax cut, and a new tax on worldwide earnings. While this could potentially drag on corporate earnings in future, more importantly, he did not announce any tax changes on capital gains or dividends which could have hit investors more directly.

The first day of the month has brought a number of positive Manufacturing PMI reports from around the world, particularly Europe where the UK (58.9 vs street 57.9) ad France (59.3 vs street 58.8) have exceeded expectations along with yesterday’s Chicago PMI report (66.3 vs street 60.7). Reports for Canada (previous 54.8) and the US (street 53.0 vs previous 54.4) are due at 9:30 am and 10:00 EDT respectively this morning. US construction spending, also due at 10:00, is expected to show a decline of 1.0% for February after a 1.7% gain the month before.

While markets are closed tomorrow, the US nonfarm payrolls report for March is still scheduled to come out at 8:30 am EDT. The street is expecting an increase of 647K jobs for March, adding on to February’s gain of 379K. The unemployment rate is expected to slip to 6.0% from 6.2%. Canadian employment comes out on Friday the 9th. US employment numbers released so far this week have been mixed. Yesterday’s ADP payrolls reports showed job growth accelerated to 517K last month from 176K, but that fell short of the 550K street estimate. Today’s weekly unemployment report was also disappointing with initial (719K vs street 680K) and continuing (3.79M vs street 3.77M) claims coming in worse than expected.

WTI crude oil is up 0.7% with OPEC+ meeting today to discuss production quotas. No changes to current ceilings are expected but there is a surprise, the price could be impacted. Metals are mixed with copper down 0.5%, gold flat and platinum up 0.25% today.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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