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● Equities starting second quarter on the front foot, shrugging off Trump’s North Korean comments
S&P 500 futures just 1.5 per cent off record and Euro Stoxx up 0.4 per cent
● Investors keeping a watch on national manufacturing surveys
Dollar little changed against peers and South African rand steady after slide
Brent and WTI crude hold above $50 a barrel, while gold soft
Equity investors are starting the second quarter in a mildly bullish mood and hoping a flurry of business surveys at the beginning of the month will back up the market’s positive bias.

The FTSE All-World stock index rose 6.4 per cent in the first three months of 2017 — its best start to a year since 2012 — helped by a 5.5 per cent rally for Wall Street, as optimism about the global economy dovetailed with hopes the Trump presidency could boost US growth.

Monday brings a range of national manufacturing reports that may help set the tone for the next few sessions.

A closely watched survey from the Bank of Japan pointed to stable growth for the country’s large manufacturers. The central bank’s Tankan survey also showed a mild improvement in conditions among medium- and small-sized enterprises.

In China, the Caixin/Markit manufacturing purchasing managers’ index (PMI) fell from 51.7 in February to 51.2 in March, but still logged a ninth successive month of expansion for the sector. Mainland China’s markets were closed for a holiday on Monday.

Equities
US index futures suggest the S&P 500 will gain 3 points to 2,366, leaving the Wall Street benchmark just 30 points below its record closing high touched a month ago.

Investors will now start looking ahead to the first-quarter corporate earnings season, wary that profit growth will need to justify the stock market’s recent rally.

“Valuation concerns are persisting in the US, with the S&P trading on a forward PE multiple of 18 times ahead of the Q1 reporting season, where the consensus expects index earnings per share growth of around +10 per cent year-on-year,” said Ian Williams, strategist at Peel Hunt,

“The trade-off between valuations and positive earnings momentum appears less stretched in the European markets,” he added.

And Europe is also starting the month in chipper mood. The Stoxx 600 adding 0.4 per cent as commodity and financials stocks lead the way.

In Asia, Japan’s benchmark Topix rose 0.3 per cent, while Australia’s S&P/ASX 200 inched up 0.1 per cent and Hong Kong’s Hang Seng gained 0.5 per cent. South Korea’s Kospi shrugged off comments by president Trump regarding Pyongyang, the index adding 0.3 per cent.

Forex
The dollar index (DXY) — a measure of the greenback against a basket of currencies — is up just 0.1 per cent at 100.46 as the “Trump trade”, which took the DXY to a 14-year high of 103.82 at the start of the year, struggles to regain momentum.

The euro is adding 0.2 per cent to $1.0670 and the British pound is easing just 0.1 per cent to $1.2539.

Japanese manufacturers in the Tankan survey predicted the yen to average ¥‎107.3 per dollar in the March survey, a weakening from the December quarter’s ¥‎104.9. In early European trade the yen is 0.1 per cent weaker at ¥‎111.48 after a 0.5 per cent gain on Friday.

The Australian dollar took a tumble after data showed retail sales contracted 0.1 per cent month-on-month in February, from 0.4 per cent growth the previous month and below economists’ expectations. The Aussie is off its session lows but still down 0.3 per cent at $0.7602.

Following a volatile week for the rand after South Africa’s finance minister was dismissed by President Jacob Zuma, the currency is just 0.3 per cent softer at 13.4570 against the greenback.

Copyright The Financial Times Limited 2017. All rights reserved.
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