China bulls keep stocks near record high

Kuwait Times - - BUSINESS - LON­DON:

Strong data from China kept world shares near a record high yes­ter­day, sent cop­per to a 4-1/2 month peak while emerg­ing mar­ket stocks have achieved a near a five per­cent gain over the last five days. Fig­ures from Bei­jing showed China’s econ­omy grew at a faster-than-fore­cast 6.9 per­cent year-on-year in the sec­ond quar­ter thanks to a pick-up in in­dus­trial out­put and do­mes­tic con­sump­tion and as in­vest­ment re­mained strong.

Wall Street, which had closed on Fri­day with the S&P 500 and Dow Jones In­dus­trial at all-time highs, was ex­pected to start the week lit­tle changed and be dom­i­nated by a bliz­zard of com­pany earn­ings re­leases. Asia shares had hit a 2-year high overnight and Europe’s bourses man­aged a 0.1 per­cent rise as they looked to score their fourth ses­sion of un­bro­ken gains.

The jump in cop­per and other in­dus­trial me­tals, as well as higher oil prices fol­low­ing the Chi­nese data, meant min­ing firms led the charge though most sec­tors also shuf­fled higher.

“The China data was very help­ful,” fund man­ager UBP’s macro and FX strate­gist Koon Chow said.

“I think it had a par­tic­u­lar res­o­nance af­ter Fri­day’s (weaker than ex­pected) US CPI and re­tail sales data ... so it is ex­tend­ing the Goldilocks en­vi­ron­ment,” he said re­fer­ring to a not-too-hot, not-too-cold mar­ket cli­mate. That lack­lus­tre US data meant the dol­lar was strug­gling to rise above a 10-month low in early Euro­pean trad­ing hav­ing watched com­mod­ity-based-and there­fore China-linked Aus­tralian and Cana­dian dol­lars jet higher overnight.

The Aussie dol­lar hit its high­est level in over two years be­fore it pulled back to $0.7823, while the Cana­dian dol­lar touched a one-year high be­fore it set­tling at around C$1.2655. Britain’s Ster­ling and the euro both eased against the dol­lar hav­ing jumped on Fri­day and as of­fi­cials from both sides went into Brexit talks in Brus­sels. The euro was worth 87.71 pence. Britain’s Brexit Sec­re­tary David Davis is in the Bel­gian cap­i­tal for talks with the Euro­pean Union’s chief ne­go­tia­tor Michel Barnier a month af­ter a first meet­ing. Davis said yesteray that hav­ing “made a good start” dur­ing their last en­counter, “this week we’ll be get­ting into the real sub­stance.”

Work­ing groups will fo­cus on three ar­eas: cit­i­zens’ rights; the EU de­mand that Britain pays some 60 bil­lion euros ($69 bil­lion) to cover on­go­ing EU bud­get com­mit­ments; and other loose ends, such as what hap­pens to Bri­tish goods in EU shops on Brexit Day.

“It seems that the Bri­tish govern­ment wants to (take) ma­jor steps to­wards the EU in the up­com­ing round of ne­go­ti­a­tions ... It has for ex­am­ple ad­mit­ted by now that it would meet its fi­nan­cial obli­ga­tions to­wards the EU-an aus­pi­cious be­gin­ning,” wrote Com­merzbank an­a­lysts in a note to clients.

Cop­per shines

Emerg­ing mar­ket stocks con­tin­ued their blis­ter­ing run fol­low­ing the up­beat Chi­nese data, with MSCI’s widely tracked 24-coun­try EM index up for a sixth day dur­ing which it has surged al­most 5 per­cent. It took the index to a more than 2-year high too and Mor­gan Stan­ley said EM as­sets had now “passed the re­cent test of higher volatil­ity with a high level of re­silience.”

“Our con­vic­tion to stay bullish on EM lo­cal rates, FX and sov­er­eign credit re­mains un­wa­ver­ing,” its an­a­lysts said. In com­modi­ties, oil also inched higher, con­sol­i­dat­ing gains made last week on signs of lower US in­ven­to­ries and stronger de­mand.

US crude stead­ied at $46.47 a bar­rel, while global bench­mark Brent was at $48.90. Gold gained too, ris­ing to $1,231 an ounce in Lon­don, though it was cop­per that shone bright­est of the me­tals, climb­ing 1 per­cent to $5,983.50 a ton, hav­ing ear­lier struck its high­est since March 2.

Shang­hai Fu­tures Ex­change cop­per rose 1.4 per­cent to 47,810 yuan ($7,060) a ton and an­other heav­ily used in­dus­trial metal, zinc, jumped al­most 2 per­cent. “I’m still bullish on cop­per. The prop­erty back­drop is still good; China econ­omy and in­dus­trial pro­duc­tion num­bers are still good. Or­ders are com­ing through from state grid,” an­a­lyst Dan Mor­gan at UBS in Syd­ney said.

In the bond mar­kets, US 10-year Trea­sury yields, which fell to as low as 2.279 on Fri­day, were steady at 2.31 per­cent as the dol­lar drifted to 112.445 yen.

Euro zone govern­ment bonds also barely budged, bid­ing their time ahead of this week’s Euro­pean Cen­tral Bank meet­ing for the lat­est sig­nals on how the cen­tral bank plans to scale back its ul­tra-loose mon­e­tary pol­icy. Ger­many’s bench­mark 10-year bond yield was at 0.51 per­cent - down from 18-month highs of 0.58 per­cent hit a week ago.

The Bank of Ja­pan too is ex­pected to keep its ul­tra-ac­com­moda­tive pol­icy un­changed when it meets to­mor­row and Thurs­day. —Reuters

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.