Some cautious balance returns (ISFM) (01-03-2011)

Stocks were largely recovered today, as signs of a stronger economy and a drop in oil prices gave them a push.

Asian stocks were led higher by the Indian Sensex, which rose sharply on higher manufacturing estimates and auto sales, while investors put their stamp of approval on the government’s deficit-reduction strategy and other measures announced as part of this year’s fiscal budget. Most other regional markets were also higher, with stocks in Shanghai and Hong Kong advancing after two separate surveys indicating that China’s manufacturing activity continued to expand in February, albeit a little slower.

In Europe, markets lost their early morning momentum as losses for financial stocks and some oil companies offset gains for the mining and auto sectors. Trading here had originally followed a strong session for most Asian markets, including gains for Chinese stocks on a more moderate improvement in Chinese manufacturing.

In neighboring Saudi Arabia, however, stocks fell sharply, reaching a year to date performance of around -15%. The fall also came as Libyan leader Moammar Gadhafi continued to cling to power in the face of mounting international opposition.

Oil prices also pushed higher in electronic trading, although they remained well below the highs seen last week. The April light crude contract rose by $1.07 to $98.04 a barrel in electronic trading on Globex.

Back on Wall Street, U.S. stocks began the last month of the quarter in positive territory although ongoing trouble in the Middle East pushed crude prices higher again, as manufacturing data from China showed the country's growth remains intact.

Source: ISFM