The empty prices are shown on the Tokyo Stock Exchange (TSE) stock quote after TSE suspended all trading due to systemic problems in Tokyo, Japan, October 1, 2020. REUTERS / Issei Kato / Files
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LONDON, May 17 (Reuters) – Global stocks recovered on Tuesday due to optimism about easing China’s crackdown on technology and COVID-19, but fears about rising prices and slowing global growth are setting a nervous tone in other markets.
European stocks followed a positive start in Asia, with the STOXX index of the 600 largest stocks in Europe (.STOXX) rising 1.7% and US stock futures, the S&P 500 e-mini, suggesting Wall Street will follow. example.
MSCI’s broadest index for Asia-Pacific equities outside Japan (.MIAPJ0000PUS) rose 2.5 percent, but the index is still down 16.8 percent so far this year.
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“There was a good session in Asia and, taking the S&P 500 as a benchmark, the US looks set to rise by around 1% … but looking ahead, markets remain focused on inflation and rising interest rates,” said Philip Shaw, chief economist at Investec. London.
“The headlines focus on higher inflationary pressures, either directly from the conflict in Ukraine or a supply chain shortage, due in part to the blockade in China,” he said.
There were signs of nervousness in bonds, currencies and commodities as fears of economic growth in the world’s two largest economies resurfaced after weak data on China’s retail and factories and disappointing US production. Read more .
The index compiled by the American bank Citi, which monitors whether economic data are coming better or worse than economists expected, is again in negative territory.
Negative surprises
New York’s Empire State Manufacturing Index, released on Monday, fell sharply in May and supplies fell at their fastest pace since the pandemic began. Read more
Yields on benchmark 10-year treasury bonds rose to 2.9185% from a close in the US of 2.879% on Monday, while the two-year yield, which rose with traders’ expectations of higher interest rates on Fed funds, rose to 2.6195%.
Investors will watch a number of central bank politicians speak on Tuesday of further signs of the time to raise interest rates to fight inflation.
Among those expected to speak are US Federal Reserve Chairman Jerome Powell at 18:00 GMT, European Central Bank President Christine Lagarde and Bank of England Deputy Governor John Canliff.
Futures markets are priced successively by 50 basis points in June and July and the base interest rate in the US will reach 2.75% by the end of the year. However, there are growing expectations that other central banks will catch up.
CURRENCY SHAKES
Currency and commodity markets were worried amid gains from investors nervous about poor economic data.
The Turkish lira fell 2%, its biggest drop since January amid fears of a global recession, fueling pressure on the currency.
The US dollar index, which tracks greenbacks against a basket of currencies, fell 0.35% to 103.8 as investors withdrew money and cut bets on rising US interest rates, leading to additional gains. Read more
The single European currency rose 0.4% during the day to $ 1.0475, losing 0.96% in one month.
Oil reached its seven-week high on Tuesday, backed by continued European Union pressure to ban Russian oil imports, which would strain supplies, and as investors focused on higher demand than easing COVID’s blockade. in China. Read more
Brent crude rose to $ 115.14, its highest level since March 28, while crude oil in West Texas (WTI) rose 63 cents to $ 114.84.
Gold prices have strengthened as the fall in the dollar has supported demand for greenback bullion and countered the pressure to restore US government bond yields. Spot gold traded up 0.2% to $ 1,827.44 an ounce.
Bitcoin appears to have stabilized, at least temporarily, at $ 30,295, after days of heavy losses in cryptocurrency markets following the collapse of the prices of several leading so-called stable coins.
STRENGTHENING IN CHINA
Hopes that China can ease two key sets of restrictions set a positive mood in stocks early Tuesday.
Shanghai has reached the long-awaited stage of three consecutive days without new cases of COVID-19 outside the quarantine zones, which could lead to the beginning of the lifting of the severe blockade of the city. Read more
Meanwhile, Chinese Deputy Prime Minister Liu He was due to speak at a meeting Tuesday with technology leaders to promote the development of the digital economy, people familiar with the matter told Reuters. Read more
The meeting is closely following clues as to how far the Chinese authorities will go in easing the regulatory repression of the previously fast-growing technology sector since the end of 2020.
Mainland China’s CSI300 (.CSI300) index rose 1.25%, while Hong Kong’s Hang Seng (.HSI) index was 3.27% higher as city-based technology companies (.HSTECH) jumped by nearly 6% from hopes that the Beijing sector will be suppressed over the relaxed sector.
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Additional reports from Scott Murdoch in Hong Kong; Edited by Lincoln Feast, Kirsten Donovan and Barbara Lewis
Our standards: Thomson Reuters’ principles of trust.
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