On Wall St overnight, stocks surged the most since May as manufacturing data in both the US and China bolstered optimism as to the state of the US economy.

The market had been looking for the ISM manufacturing index to fall to 52.5; instead it came in at 56.3. However, it wasn’t all rosy with the private sector jobs reports showing companies unexpectedly cut 10,000 jobs last month, when the market was expecting a gain of 15,000. Nonetheless, traders chose to focus on the positives.

The broad-based S&P 500 and NASDAQ indexes were the top performers, both adding 3% while the Dow Jones Industrial Average rose 2.5%.

Regional markets across Asia are all firmer in afternoon trade, benefiting from the strongest gains on Wall St in eight weeks. Sentiment improved dramatically overnight on the back of the better-than-expected manufacturing data from China and the US. As at 06:00, the Hang Seng and Shanghai Composite are the best performers, up 1.2% and 0.9% respectively. The Nikkei 225 and Kospi are adding 0.6% and 0.2%.

In Australia, the ASX 200 is 0.6% firmer at 4523, well off earlier highs of 4552. Today’s significant underperformance of offshore leads should not be that surprising given yesterday’s impressive outperformance, with investors seeming cautious about chasing the market ahead of key jobs data out of the US tomorrow. Gains for the session are broad-based and are being led by the consumer discretionary, financials and materials sectors, while the industrials sector is the day’s laggard, trading flat.

Even before yesterday's better-than-expected manufacturing data out of the US, equity markets were in the ascendency but the sentiment attached to this reading was sufficient to ensure markets across the globe did indeed start the new month on an upbeat note. The size of the gains however - around 3% for many major indices - was such that a degree of profit taking was inevitable and we're now looking at a slightly softer start in Europe, although much of the upside is set to remain intact at least for the time being.

Those disappointing ADP payroll numbers out of the US will also help serve as something of a reality check ahead of tomorrow's non-farms and again any surprises here could easily see all of yesterday's gains unwinding.

In terms of fundamentals, eurozone GDP and interest rate verdicts will be top of the agenda for many, whilst the UK house price index from Nationwide is also worth watching amidst concerns that another collapse in local property prices could yet be on the cards.

Earnings look relatively light too, with an IMS from UK electronics retailer DSG and full year results from Pernod-Ricard being amongst the few notable events here.

Ahead of the open we're currently calling the FTSE down 18 at 5348, the DAX down 18 at 6066 and the CAC down 21 at 3603.