Strong manufacturing data pushes markets higher ahead of US payroll figures BT rallies on results

Most European markets pushed higher on Friday as investor risk appetite increased following strong Chinese data which underpinned mining stocks, and on encouraging European manufacturing figures. Spanish markets bucked the trend after a short selling ban was lifted and the IBEX declined 1.5%.

Although the manufacturing figures for Europe showed that the sector continued to shrink in January, it was at the slowest pace for 11 months. The figure was expected at 47.5 against last month’s 46.1, but actually beat expectations at 47.9. Germany specifically saw its manufacturing output rise to 49.8 – an 11-month high and just shy of growth which is reported at a figure above 50. Spain also reported a 19-month high at 46.1. The industrial sector was very much a drag on the Eurozone economy last year; however, this PMI looks like this could be the start of a turnaround. On a negative note France sank to a four-month low at 42.9 which is of some concern.

Manufacturing data from China was slightly contradictory, with the HSBC figure coming in ahead of expectations whilst the standard manufacturing PMI was slightly worse than expected. Importantly, however, both figures were over 50 – showing that growth had returned to the world’s second largest economy. The mining sector found support in these figures, with Vedanta and Fresnillo both trading over 2% higher.

Focusing on single stocks, BT reported better than expected results showing strong demand and posting a 7% rise in third quarter pre-tax profits resulting in its shares gaining over 5% in early trading. Tate & Lyle were top of the loser board, shedding over 3% after reporting third quarter profits in line with expectations but still lower than last year and generally cautious in tone as they warned of the impact of the hot summer last year and increased levels of corn price instability.

Volatility is on the cards as we head into the afternoon and investors look towards non-farm payrolls from the US. The figures this afternoon are expected to offer further support to the idea that the world’s largest economy is still on track to recovery despite the surprise contraction reported on Wednesday. Payrolls are expected to show an expansion of 150,000 – 160,000 whilst the unemployment rate is expected to stay constant at 7.8%.

Manufacturing figures and University of Michigan Confidence figures from the US are also due this afternoon.

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