Stocks edge up on China exports
LONDON/HONG KONG (Reuters) – Global shares pushed to a record high on Tuesday, buoyed by better than expected Chinese export data as markets awaited the release of US inflation data for further clues about the global economic recovery.
The surprisingly strong Chinese data implied that global demand remained strong and helped reassure investors that the world economy was healing from the COVID19 pandemic, despite the spread of the Delta variant.
MSCI’s all-country equity index added 0.1%, having touched a record high earlier in the day. The pan-European STOXX 600 index slipped 0.2% after hitting a record high in early trading.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1%, its best daily gain since late June, led by a 1.6% rise in Hong Kong where tech stocks rose broadly. Japan’s Nikkei was up 0.5% while Australian shares slipped 0.02%.
A Reuters poll shows expectations for Tuesday’s inflation data to come in at 4.9% for the month of June when the numbers are released at 12:30 p.m. GMT, compared to 5% the month before.
“Today will be one of the last numbers that are of strong inflation because of the base effect and from then we should have confirmation that inflation will be transitory,” said Francois Savary, chief investment officer at Swiss wealth manager Prime Partners. “Inflation will remain a key feature for markets as it will drive interest rates.”
Investors are navigating a busy week, with the onset of US earnings season and a testimony by Federal Reserve chair Jerome Powell, which will also be scrutinized for any indications on the timing of potential US tapering.
In Hong Kong, tech behemoth Tencent jumped 4.4% after China’s antitrust regulator on Tuesday approved its plan to take the country’s No. 3 search engine, Sogou Inc., private in a $3.5 billion deal.
“We have clearly seen a (new) round of corrections of the technology sector which places a heavy weight on Hong Kong’s stock market, due to concerns over a new round of regulatory crackdown following the probe into Didi. Against this backdrop, there is room for short-term rebound,” said Zhang Zihua, chief investment officer at Beijing Yunyi Asset Management.
Overnight, Wall Street’s main indexes closed at their highest levels ever, lifted by Tesla and bank stocks.
The S&P 500 banks index climbed 1.3% ahead of quarterly earnings reports this week from major banks. JPMorgan Chase rose over 1% and Goldman Sachs rallied more than 2%, fueling the Dow’s gains.
The next question is whether company earnings will support Wall Street’s run higher.
S&P 500 companies’ earnings per share for the June quarter are expected to rise 66%, according to IBES data from Refinitiv. JPMorgan, Goldman Sachs, Bank of America and other big banks kick off results from Tuesday.
US crude ticked up 0.7% to $74.63 a barrel. Brent crude rose 0.7% to $75.71 per barrel.
Gold was flat. Spot gold traded at $1806.91 per ounce.