While Asian stocks continued their longest rally since August overnight, led higher for the third consecutive day on the back of Japan (+1.3%), Australia (+1.2%) and China (+0.4%) strength, European stocks have as of this moment halted their longest rally since October (Stoxx -0.1%) and U.S. index futures are little changed. Oil slipped from an eight-week high despite yesterday’s massive rise in US oil inventories on hopes Saudi Arabia may be forced to cut production as its budget strains grow acute and the kingdom is forced to seek a $10 billion loan, its first material borrowing in a decade.

Today the US economy will get two more important data points, initial claims and the Service ISM, leading into tomorrow’s key report on nonfarm payrolls giving more clues on the strength of the U.S. economy and the trajectory of interest rates. Some better-than-expected data and optimism China will do more to tackle slowing growth boosted sentiment in the past week, with global equities recouping more than half this year’s losses since sinking to a 2 1/2-year low on Feb. 11. In terms of imminent “stimulus” catalysts, the market is looking at the European Central Bank meeting on March 10 while the Federal Reserve on March 16 may lead to more hawkishness and a negative impact on stocks.

“It’s been a pretty decent couple of weeks and there didn’t seem to be anything to prompt the rally in terms of data,” Ben Kumar, an investment manager at Seven Investment Management in London told Bloomberg. “It’s possible people are taking profit and pausing for breath before the ECB meeting next week.”

S&P 500 futures were little changed after yet another low-volume short squeeze rally pushed the market off the unchanged line and less than 3% down on the year.

Will today see a repeat of the low-volume levitation? Stay tuned.

Markets at a glance:

  • S&P 500 futures down 0.1% at 1983
  • Stoxx 600 down 0.1% to 340
  • FTSE 100 up 0.2% to 6158
  • DAX up less than 0.1% to 9779
  • German 10Yr yield down less than 1bp to 0.2%
  • Italian 10Yr yield down 2bps to 1.44%
  • Spanish 10Yr yield down less than 1bp to 1.57%
  • MSCI Asia Pacific up 1.4% to 125
  • Nikkei 225 up 1.3% to 16960
  • Hang Seng down 0.3% to 19942
  • Shanghai Composite up 0.4% to 2860
  • US 10-yr yield up 2bps to 1.86%
  • Dollar Index down 0.01% to 98.2
  • WTI Crude futures down less than 0.1% to $34.64
  • Brent Futures down 0.5% to $36.74
  • Gold spot up 0.2% to $1,242
  • Silver spot up less than 0.1% to $14.95

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    • Looking at regional markets, Asian equities traded higher for the 3rd consecutive day with strength in energy and financials supporting global risk-on sentiment. Nikkei 225 (+1.3%) outperformed as JPY weakness supported exporters, with index giant Fast Retailing also reporting strong sales results. ASX 200 (+1.2%) was underpinned by commodity strength as material names led after iron ore rose to its highest since October. Chinese markets have been less decisive and underperform following further weak PMI figures, although the Shanghai Comp (+0.4%) was marginally positive after the PBoC resumed liquidity injections (CNY 40bIn of liquidity via 7-day reverse repos). 10yr JGBs are lower following spill-over selling in T-Notes as upbeat sentiment dampens demand for safer assets, while volatility was observed following a JPY 300BN enhanced liquidity auction for the long and super long end, with 20yr, 30yr and 40yr JGB yields declining to record lows.

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