Global stocks climbed as Chinese data pointing to an economic bounceback helped markets look past patchy company earnings and the possibility of more central bank policy tightening.
(Bloomberg) — Global stocks climbed as Chinese data pointing to an economic bounceback helped markets look past patchy company earnings and the possibility of more central bank policy tightening.
Europe’s Stoxx 600 benchmark gained 0.3% as China’s consumer recovery lifted luxury names including LVMH, and travel shares rose after an upbeat report from EasyJet Plc. on bookings. In the US, contracts on the S&P 500 and Nasdaq 100 advanced as investors prepared for more first-quarter earnings, including from Goldman Sachs Group Inc and Bank of America Corp. Both banks added about 1% in premarket trading.
Earlier in Asia, mainland Chinese shares eked out gains after data showed consumer spending helped China’s economy grow at a faster pace than forecast last quarter. Still, 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.
Concerns about an upcoming recession have pushed investors’ allocation of equities versus bonds to the lowest since 2009, according to Bank of America Corp.’s global fund manager survey. At the same time, strategists at the bank said the extreme bearishness could signal a turning point.
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. In Europe,
Investors will focus in particular on reports from smaller regional banks that were roiled by last month’s financial sector stress.
Meanwhile, two-year Treasury yields fell below 4.2% after inching higher on Monday following Richmond Fed President Thomas Barkin’s comments that he wanted to see more evidence inflation is easing to the 2% target. The dollar weakened against its Group-of-10 peers, snapping a two-day rally.
Some other central banks could be poised for more tightening. In Australia, minutes from 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 is putting fresh pressure on the Bank of England.
The wage data buoyed the pound 0.5% versus the US dollar, while the Australian dollar jumped as much as 0.6%. 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 rose 0.2% as of 5:03 a.m. New York time
- Nasdaq 100 futures rose 0.4%
- Futures on the Dow Jones Industrial Average rose 0.1%
- The Stoxx Europe 600 rose 0.3%
- The MSCI World index rose 0.2%
- S&P 500 futures rose 0.2%
- Nasdaq 100 futures rose 0.4%
- The MSCI Asia Pacific Index rose 0.1%
- The MSCI Emerging Markets Index fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.3%
- The euro rose 0.5% to $1.0977
- The British pound rose 0.5% to $1.2439
- The Japanese yen rose 0.2% to 134.15 per dollar
- The offshore yuan was little changed at 6.8800 per dollar
Cryptocurrencies
- Bitcoin rose 0.9% to $29,729.48
- Ether rose 1% to $2,097.78
Bonds
- The yield on 10-year Treasuries was little changed at 3.59%
- Germany’s 10-year yield advanced two basis points to 2.49%
- Britain’s 10-year yield advanced five basis points to 3.74%
Commodities
- West Texas Intermediate crude fell 0.3% to $80.60 a barrel
- Gold futures rose 0.4% to $2,015.30 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jason Scott, John Cheng and Tassia Sipahutar.
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