Stock markets around the world are off to a strong start for the second quarter. Manufacturing data in Asia, Europe and the U.S. is fueling the rally and building investor confidence that the economic rebound is gaining traction. The ISM report this morning rose to its fastest pace in five years. The combination of rising manufacturing and a dip in the U.S. dollar is also fueling gains for commodities. Crude oil is up over 1.5% to $85 a barrel. Gold futures are up almost $13 to $1,127 an ounce. Copper is up 0.8% and hitting new 52-week highs.

Asian markets saw widespread gains. The Japanese NIKKIE index hit new 18-month highs on a weaker yen and news that Japanese business sentiment was improving. The NIKKEI closed up 1.39% for the session. Hong Kong stocks rose 1.4% thanks to positive comments from Goldman Sachs regarding valuations for the local market. Meanwhile comments from the Chinese central bank that they would be unlikely to raise interest rates in April fueled gains for Chinese stocks. The Shanghai index also got a boost from the China purchasing managers index, which rose from 52 in February to 55.1 in March. The Shanghai rallied 1.2% on the session.

The strength in manufacturing continued in Europe. A euro-zone purchasing managers index rose from 54.2 in February to 56.6 in March. A British gauge of manufacturing activity surged to its highest levels in 15 years. Adding even more fuel to the fire was a positive report on lending expectations by English banks. Most of the European markets rallied to new 18-month highs. The English FTSE gained 1.1%. The German DAX added 1.3%. The French CAC-40 rose 1.5%.

Here at home in the U.S. the ISM report was the major headline with the pace of manufacturing hitting its fastest pace since 2004. The Institute for Supply Management said their manufacturing index rose from 56.5 in February to 59.6 in March. Economists were only predicting a rise to 57. Numbers over 50 indicate growth and expansion. It looks like the U.S. has finally hit the inventory rebuilding phase we have been waiting for. The pace of manufacturing should encourage investors that the economic recovery is gaining momentum.

Meanwhile the Labor Department said weekly initial jobless claims fell 6,000 to 439,000 last week. Analysts were expecting a drop to 440,000. While claims remain high they are retreating from their peak. Investors will remain focused on the jobs report due out tomorrow morning. Economists are expecting the U.S. to show an increase of 180,000 to 190,000 new jobs. The stock market will be closed for the Good Friday holiday while the bond market will be open for a short time.

The S&P 500 index managed to hit a new 52-week high this morning and it's still trading near its highs just under the 1180 level. The NASDAQ composite did not hit a new high this morning and the tech-heavy index is definitely paring its gains. The Dow Industrials rallied right up to their highs on March 25th and stalled. The small cap Russell 2000 index failed to even break out past yesterday's highs much less challenge the 52-week high from March 25th. This could be a clue that the rally really is tired in spite of the positive economic data.

Chart of the S&P 500:

Chart of the NASDAQ:

Chart of the Dow Industrials:

Chart of the Russell 2000 index: