Scoreboard: Europe hammers home

In European economic data, the eurozone manufacturing PMI was revised up from the flash estimate of 51.3 to 51.4 in August. Manufacturing PMIs in Germany, France and Italy were 51.8, 49.7 and 51.3 respectively. European manufacturing output is growing again modestly, with the UK manufacturing PMI also rising to a 30-month high of 57.2 in August, again beating market expectations. The UK recovery is gaining traction and recent data suggests growth will be above trend through the September quarter.

As for European stocks, these rallied overnight as robust factory data from China and Europe supported sentiment. Broker upgrades to European equities also supported the bid. UK telecom firm Vodafone gained 3.4 per cent after announcing talks with Verizon to sell its 45 per cent stake in the Verizon Wireless joint venture for $130 billion. The FTSEurofirst 300 index rose by 1.8 per cent, while the German Dax rose by 1.7 per cent and the UK FTSE gained 1.5 per cent. Mining shares featured among the top gainers, with Rio Tinto rising 4.2 per cent in London trade and BHP Billiton gaining 2.3 per cent.

Across the Atlantic, Wall Street was closed for the Labour Day holiday, while the US dollar rallied to a one-month high against the yen overnight, as improving sentiment on global growth and waning expectations of an imminent strike against Syria reduced demand for the safe-haven yen.

The euro, meanwhile, hit early highs near $US1.3225 before easing to lows near $US1.3180, ending US trade near $US1.3195. The Australian dollar eased from highs near 90.1 US cents to near 89.6 US cents before ending US trade near 89.85 US cents. The Japanese yen eased from ¥98.55 per US dollar to ¥99.45, before ending US trade near ¥99.30.

In the commodities space, world oil prices were mixed overnight. Brent crude eked out a small gain after reversing a deep early slide amid upbeat economic data. Fears about a near-term disruption of Middle East oil supplies eased after US President Barack Obama said on the weekend he would seek congressional authorisation for military action against Syria, almost certainly pushing back any air strikes until Washington's summer recess ends on September 9. Brent crude rose by 35 US cents, or 0.3 per cent, to $US114.36 a barrel while US Nymex crude fell by 83 US cents, or 0.8 per cent, to $US106.82 a barrel. 

As for base metals, these were mostly higher on Monday with the exception of Nickel, which was down 0.4 per cent. Copper rose by 1.9 per cent, driven by the improvement in manufacturing activity across the globe. Gold fell in electronic trade with the Comex December futures price down by $US4.10 an ounce, or 0.3 per cent, to $US1392 per ounce. The iron ore price rose by $US1 to $US138.7 a tonne.

For the day ahead then, local retail sales and current account balance figures are released at 1130 AEST, while the Reserve Bank board meeting takes place at 1430 AEST. In the US, the ISM manufacturing and construction spending figures are released.

Craig James is CommSec's chief economist. Business Spectator's Adam Carr is on leave.

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