scorecardresearchGlobal Markets Wrap: Stocks Rise as Earnings Stir Bets for Soft Landing

Global Markets Wrap: Stocks Rise as Earnings Stir Bets for Soft Landing

Updated: 04 Aug 2022, 07:49 AM IST
TL;DR.
Asian stocks rose Thursday after a US rally triggered by earnings and robust economic data, while bets on further Federal Reserve interest-rate hikes supported shorter maturity Treasury yields.
A woman wearing a face mask walks past a bank's electronic board showing the Hong Kong share index in Hong Kong, Wednesday, Aug. 3, 2022. Asian stock markets rose Wednesday as traders watched for signs trade might be disrupted by U.S.-Chinese tension over an American lawmaker's visit to Taiwan. (AP Photo/Kin Cheung)

A woman wearing a face mask walks past a bank's electronic board showing the Hong Kong share index in Hong Kong, Wednesday, Aug. 3, 2022. Asian stock markets rose Wednesday as traders watched for signs trade might be disrupted by U.S.-Chinese tension over an American lawmaker's visit to Taiwan. (AP Photo/Kin Cheung)

(Bloomberg) -- Asian stocks rose Thursday after a US rally triggered by earnings and robust economic data, while bets on further Federal Reserve interest-rate hikes supported shorter maturity Treasury yields.

A global share gauge pushed toward the highest level since early June, helped by gains in Chinese tech companies. US futures fluctuated as traders weighed how much further the revival in equities from bear-market lows can go.

Investors Wednesday warmed to earnings and buyback announcements from Moderna Inc. and PayPal Holdings Inc. as well as surprise US service-sector growth. Almost 75% of US firms have so far beaten earnings estimates. Jitters over US-China ties faded after House Speaker Nancy Pelosi departed Taiwan.

Federal Reserve officials again signaled they will do what’s required to cool high inflation with rate increases even if that raises the risk of recession. The bond market reflected the rhetoric, with higher shorter-tenor yields helping to deepen a key yield curve inversion.

The dollar fluctuated and oil held a plunge on signs of slowing demand in a US inventory report. Gold advanced and Bitcoin retook $23,000.

Global stocks have now rebounded some 10% from a June low, reducing year-to-date losses to about 15%. The big debate is whether that points to complacency given the bond market is flashing a warning of an economic slowdown.

“The volatility is not over and a lot of data is still out there, it’s still going to matter,” Ann Miletti, head of active equity at Allspring Global Investments, said on Bloomberg Television. “I would still focus on quality here because there is a lot of choppiness to come, a lot of answers we still need.”

Taiwan tension remains among the uncertainties. China is due to kick off military drills illustrating its ability to surround the island in a belligerent show of force following Pelosi’s trip.

Later in Europe, the UK is set to add to a global wave of monetary tightening that’s putting the brakes on the world economy. The Bank of England is expected to join some 70 other institutions around the world in delivering a half-point increase in borrowing costs.

This week’s MLIV Pulse survey is asking about your outlook for corporate bonds, mergers and acquisitions and health of US corporate balance sheets through the end of the year. It takes one minute to participate in the MLIV Pulse survey, so please click here to get involved anonymously. 

What to watch this week:

  • BOE rate decision, Thursday
  • US initial jobless claims, trade, Thursday
  • Cleveland Fed President Loretta Mester due to speak, Thursday
  • US employment report for July, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures were steady as of 10:49 a.m. in Tokyo. The S&P 500 rose 1.6%
  • Nasdaq 100 futures fell 0.1%. The Nasdaq 100 rose 2.7%
  • Japan’s Topix index was steady
  • Australia’s S&P/ASX 200 index increased 0.3%
  • South Korea’s Kospi index rose 0.6%
  • Hong Kong’s Hang Seng index added 1.9%
  • China’s Shanghai Composite index rose 0.5%
  • Euro Stoxx 50 futures increased 0.2%

Currencies

  • The Bloomberg Dollar Spot Index was steady
  • The euro was at $1.0170
  • The Japanese yen was at 133.77 per dollar
  • The offshore yuan was at 6.7577 per dollar

Bonds

  • The yield on 10-year Treasuries rose one basis point to 2.71%
  • Australia’s 10-year yield rose two basis points to 3.10%

Commodities

  • West Texas Intermediate crude was at $91.21 a barrel, up 0.6%
  • Gold was at $1,767.66 an ounce, up 0.1%

First Published: 04 Aug 2022, 07:49 AM IST