Global stocks struggled to make much headway on Tuesday as investors weighed Chinese data that pointed to an uneven recovery, as well as the possibility of further policy tightening by the Federal Reserve and other central banks.
(Bloomberg) — Global stocks struggled to make much headway on Tuesday as investors weighed Chinese data that pointed to an uneven recovery, as well as the possibility of further policy tightening by the Federal Reserve and other central banks.
Europe’s Stoxx 600 benchmark edged higher, with luxury companies seen benefiting from increased consumer spending in China. Travel shares rose after EasyJet Plc. said bookings remained strong. Contracts on the US S&P 500 and Nasdaq 100 were little changed, after closing almost unchanged on Monday.
Earlier in Asia, mainland Chinese shares eked out small gains, while benchmarks in Hong Kong, South Korea and Australia all slid. Data showed China’s economy grew at a faster pace last quarter than economists forecast as consumers ramped up spending, but the recovery was uneven with industrial activity relatively subdued.
“We need a bit of time to assess the true state of recovery in China and how strong, or sustainable, this recovery is going forward,” said Stuart Cole, chief macro economist at Equiti Capital in London.
Hopes that the current rate-rise cycle was winding down also “have been dashed by the data, and comments coming out of, most importantly, the Fed, but also places like the UK too,” Cole added.
First-quarter earnings have so far failed to reassure, with the current season expected to be the worst since the pandemic began three years ago, and estimates for coming quarters continuing to fall. Goldman Sachs Group Inc and Bank of America Corp. will report on Tuesday, followed by several smaller regional banks whose health is in focus following last month’s financial turmoil.
Meanwhile, two-year Treasury yields held just below 4.2% – up some 15 basis points in the past week, with Richmond Fed President Thomas Barkin the latest policymaker to say he wants more evidence that inflation is easing to the 2% target.
Some other central banks too could be poised for more tightening. Minutes of the Reserve Bank’s April meeting showed a quarter-point hike had been discussed before members decided on a pause. And an acceleration in UK wage growth heaps fresh pressure on the Bank of England.
On currency markets, the wage data buoyed the pound as much as 0.3% versus the US dollar, while the Australian dollar jumped half a percentage point. The greenback weakened against all its Group-of-10 peers however, snapping a two-day rally.
On commodity markets, oil prices edged higher after the China growth data.
Key events this week:
- US housing starts, Tuesday
- Goldman Sachs and Bank of America release first-quarter earnings, Tuesday
- Fed’s Michelle Bowman discusses digital currency, Tuesday
- Eurozone CPI, Wednesday
- Fed releases Beige Book, Wednesday
- Fed’s John Williams gives a speech, Wednesday
- Fed’s Austan Goolsbee is interviewed on NPR, Wednesday
- China loan prime rates, Thursday
- Eurozone consumer confidence, Thursday
- US initial jobless claims, existing home sales, index of leading economic indicators, Thursday
- ECB issues report on March policy meeting, Thursday
- Fed’s Christopher Waller speaks at cryptocurrency-focused event, Thursday
- Fed’s Patrick Harker speaks on “monetary policy and housing”, Thursday
- Fed’s Loretta Mester discusses the economic and policy outlook, Thursday
- Fed’s Raphael Bostic discusses regional and national economic conditions, Thursday
- Fed’s Michelle Bowman and Lorie Logan speak at event, Thursday
- PMIs for Eurozone, Friday
- Japan CPI, Friday
- Fed’s Lisa Cook discusses economic research at an event, Friday
Some of the main moves in the market:
Stocks
- S&P 500 futures were little changed as of 3:12 a.m. New York time
- Nasdaq 100 futures were little changed
- Futures on the Dow Jones Industrial Average rose 0.1%
- The Stoxx Europe 600 rose 0.3%
- The MSCI World index was little changed
- S&P 500 futures were little changed
- Nasdaq 100 futures were little changed
- The MSCI Asia Pacific Index was little changed
- The MSCI Emerging Markets Index fell 0.4%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro rose 0.2% to $1.0948
- The British pound rose 0.3% to $1.2416
- The Japanese yen was little changed at 134.42 per dollar
- The offshore yuan was little changed at 6.8806 per dollar
Cryptocurrencies
- Bitcoin rose 0.8% to $29,694.32
- Ether rose 1.2% to $2,102.8
Bonds
- The yield on 10-year Treasuries was little changed at 3.60%
- Germany’s 10-year yield advanced two basis points to 2.49%
- Britain’s 10-year yield advanced four basis points to 3.73%
Commodities
- West Texas Intermediate crude rose 0.5% to $81.23 a barrel
- Gold futures rose 0.2% to $2,011.20 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jason Scott and John Cheng.
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