Asia markets rise as oil surges after surprise OPEC+ cut; investors digest factory data

China’s Caixin/Markit manufacturing Purchasing Managers’ Index for March was 50, missing estimates of 51.7 by economists polled by Reuters.

The reading for March fell from 51.6 seen in February, which was above the 50-level mark that separates growth from contraction.

China’s official PMI for March stood at 51.9, higher than expectations of 51.5 from a Reuters survey.

– Jihye Lee

The ASEAN region recorded its 18th straight month of growth in its manufacturing sector, according to a private survey by S&P Global.

The region’s manufacturing purchasing managers index stood at 51, a slight fall from February’s figure of 51.5.

S&P Global noted this was due to further improvement in operating conditions across four of the seven ASEAN constituents, with Myanmar leading growth for the first time in 32 months. The country’s PMI hit a record high of 55.5 in March.

Thailand and the Philippines rounded off the top three performers in region with March PMI figures of 53.1 and 52.5 respectively. Vietnam was the worst performer with its PMI coming in at 47.7 in March.

— Lim Hui Jie

Japan’s manufacturing purchasing managers index has risen to 49.2% for March, higher than February’s figure of 47.7%, according to a private survey by the au Jibun bank.

Despite still remaining in contraction territory for a fifth straight month, the bank said this was “a softer deterioration in the overall health of the Japanese manufacturing sector. The negative reading was only mild, and the softest in the current five-month sequence.”

A PMI reading of above 50% indicates expansion, while a reading below 50 indicates contraction in the sector.

The survey said a contributing factor to the sub-50 PMI reading was a further contraction in output levels.”The downturn was only modest and reportedly the result of weak customer demand.”

— Lim Hui Jie

Oil futures surged as much as 8% at the open after OPEC+ members announced to cut a total of more than 1 million barrels per day to extend through the end of 2023.

Brent crude futures last rose 5.98% to $84.67 a barrel and U.S. West Texas Intermediate crude futures (WTI) jumped 6.04% to $80.24 a barrel.

This comes after oil prices rebounded last week and saw a week-to-date gain of more than 9%.

The latest announcement is an “an unwelcome start to the new week for risk markets and policymakers still dealing with sticky inflation and the fallout of the recent banking crisis,” IG’s Tony Sycamore said in a Monday note.

National Australia Bank added that the unexpected announcement will likely add pressure to European economies, where core inflation rose slightly last month.

New York Federal Reserve President John Williams said Friday that the central bank is steadfast in its commitment to bring down inflation but is watching what is happening in the world of finance.

In a speech delivered in Connecticut, Williams said inflation “remains a top concern” and noted that the Fed must “use its monetary policy tools to bring inflation down.”

However, he noted some of the tumult recently in the banking system and indicated he will be watching the situation closely.

“I will be particularly focused on assessing the evolution of credit conditions and their effects on the outlook for growth, employment, and inflation,” he said.

—Jeff Cox

Gold is on pace to post a monthly price gain that hasn’t been seen in more than two years.

With just Friday’s session left in the March trading month, gold is on pace to finish 9% higher. That would be its best monthly performance since July 2020, when the metal rallied 10.3%

If a Friday selloff pushes its monthly advance below 7.8%, March would instead become the metal’s best month since May 2021.

Gold prices were steady early Friday.

— Alex Harring, Gina Francolla

Futures got a boost after an inflation gauge followed by the Federal Reserve came in lighter than expected. The personal consumption expenditures price index excluding food and energy increased 0.3% for the month, the Commerce Department reported Friday. That was below the 0.4% Dow Jones estimate and lower than the January increase.

-John Melloy, Jeff Cox

Emergency borrowing at the Federal Reserve’s discount window fall last week, raising some hope that the banking crisis could be receding.

Primary credit lending totaled $88.2 billion while banks took out $64.4 billion through the Fed’s new Bank Term Funding Program, according to Fed data released Thursday that covered the period from March 22-29.

That total of $152.6 billion was down slightly from $164 billion the week before. The Fed instituted the BTFP and relaxed rules on the discount window following the implosion of Silicon Valley Bank and Signature Bank in early March.

Banks generally don’t like the use the discount window as it signals that they are under stress and can’t raise capital in the private marketplace.

—Jeff Cox