Wall Street resumed business following the Labor Day holiday, with a bullish session as the S&P 500 rallied by 2.5% and the Dow finished 2.4% higher. Investors were encouraged by a strong rally on the Chinese markets as the Shanghai shrugged off earlier weakness to surge 3% higher on the day. Earlier data indicated that Chinese imports had in fact shrunk a great deal more than expected and, indeed, this marks the 10th consecutive month of decline. Given this data and the subsequent rally, many investors sensed that the authorities had resumed their support of equities and that the intervention may continue for some time to come.
The calmer mood also lent support to commodities with Brent crude registering a 4% gain and WTI treading water above recent lows as a sign of increased stability. Supply concerns also saw copper surge by the biggest daily margin in 2.5 years to also finish 4% higher. The currencies of resource-driven economies received a boost as a result with CAD, NOK, AUD and NZD all benefiting from the tailwind.
Focus will switch back to the data following a relatively quiet start to the week and already this morning we have seen the effects of disappointing UK manufacturing and production data. Sterling, which has been such an outperformer of late, has had the wind taken from its sails as a result and has traded below its opening level against both USD and EUR. There are interest rate decisions for both Canada and New Zealand overnight and with markets expecting a 0.25% cut for the latter, there could be some volatility for those trading the Kiwi. Stateside, the lesser-followed JOLTS job figures may see more interest than usual in light of the upcoming FOMC meeting next week.