SCOREBOARD: European hoist

Strong German manufacturing data and Portugal's successful bond sale drove record highs in European and US markets.

Stocks pushed higher around the globe last night, with the excitement starting in Europe after data showed German factory orders surged 2.2 per cent in March following a similar gain the month prior. Strong gains. Throw into that the fact that Portugal undertook its first bond sale since requesting a bailout, which was a huge success. They sold €3 billion worth of 10-year bonds, attracting €10.2 billion in bids at a yield of 5.67 per cent, which is one of the better ones going around.

It was only a day or two ago that Greece was saying the crisis was broadly over – well, the worst of it – and talk is they may be able to tap the market sometime next year or the year after. The International Monetary Fund in contrast suggested that Greek debt is still way too high and that further debt relief will be necessary. We’ll see, but the indications are good: European growth is picking up and the crisis is clearly abating. So the Dax hit a new high, rising 0.9 per cent; the CaC was up 0.4 per cent; and the FTSE100 rose 0.6 per cent.

Following the European lead, US stocks were bid from the open and stayed on that trajectory throughout the session. There wasn’t really any major US data or news flow, but on the positive signals coming out of Europe, we saw both the S&P500 and the Dow hit new records – a 0.5 per cent rise to 1625 and 87 points to 15,056, respectively. By sector we saw decent gains across the board, except in tech (and indeed the Nasdaq was only 0.1 per cent higher to 3396), with even basic materials and energy stocks pushing higher despite broad-based weakness in the commodity space.

Turns out that commodity markets didn’t share in the joyous rally that equities did, which bizarrely is becoming the norm – even on strong growth data. Crude was down 0.6 per cent to $95.5, copper fell 0.2 per cent and gold was off $16 to $1451.

In price action elsewhere the euro, after hitting a high of 1.3130, ended the session little changed at 1.3079. The Australian dollar is also little changed from 1630 AEST at 1.0184 (down about 60 pips from just before the Reserve bank decision). The British pound dropped about 50 pips to 1.5484 while the yen sits at 99.

The on the rates side we saw the US 10-year yields rise about 4 basis points to 1.78 per cent, the 5-year was up a basis point to 0.75 per cent while the 2-year sits around 0.22 per cent.

Bits and pieces outside of that, there wasn't anything earth shattering. We saw US consumer credit rise a further $8 billion in March after a strong $16.6 billion increase the month prior, and there were two other minor releases – an economic optimism survey showed optimism dipped slightly to 45.1 from 46.2; and job openings eased a bit in March to 3.84 million, though that’s still not far from a five-year high.

Looking at the day ahead, the SPI suggests the All Ords will rise a further 0.5 per cent today. There isn’t much on the way of Aussie data, although at around 1400 AEST (I think) we get some Chinese trade data.

Don't forget the asymmetric responses to Chinese data these days. If it's weak it’ll be front page news and analysts will pounce on it as proof the world is going into a depression. If it’s strong, it will be dismissed as unbelievable data.

Outside of that we see UK house prices and German industrial production tonight. US data is light and includes mortgage applications.

That’s the lot, have a great day…

Adam Carr is a leading market economist.

Follow @AdamCarrEcon on Twitter.

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