- DJIA headed for a run towards 2018 highs.
- Trade negotiations on track and Chinese manufacturing back into expansion territory.
The mood on Wall Street was positive after China’s official manufacturing PMI released on Sunday showed a sharp bounce. Then, trader’s spirits were lifted further on the back of US data (Analysts at Westpac offered a breakdown as follows):
-
The rise in the ISM manufacturing index was comforting – up from 54.2 in Feb to 55.3 in Mar – led by stronger new orders (+1.9pts to 57.4) and a sharp recovery in employment (+5.2pts to 57.5). Meanwhile, construction spending will lead to a meaningful lift in GDP tracking estimates, with a solid 1% gain in Feb and Jan is now seen at 2.5% from an initial estimate of 1.3%.
-
Feb retail sales was underwhelming – both the headline and the core control group fell -0.2%, a material miss for both, though there were upward revisions to Jan. There may be an “inclement weather” effect with building materials down a huge -4.4% in the month.
The Dow Jones Industrial Average put on a decent 329 points, or 1.3%, to close around 26,258. The Nasdaq Composite added 1.3% to end around 7,829. Monday marks the best percentage gain for the blue-chip Dow since February the 15th and the best daily gain for the broad-based S&P since March the 11th.
DJIA levels
Snapping the 22nd Feb highs, technically, the DJIA is now supported by the 21-D SMA and bulls broke above the prior high of 26109 through the psychological 26000 level. Eyes are now on the 2018 highs at 26951. Bears will otherwise target all the way down to the 23.6% Fibo retracement of the late Dec swing lows to late Feb swing highs at the low end of the twenty-five hundreds. This area guards a break all the way down to the 38.2% Fibo of the same range around 24400.
Share
