(Bloomberg) – European and US stock futures rose along with Asian stocks as China’s manufacturing sector posted its biggest improvement in more than a decade.
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The benchmark Asian equities rose the most since mid-January, supported by a 4% rise in the benchmark Hong Kong index. Futures on the S&P 500, Nasdaq 100 and Euro Stoxx 50 all erased earlier losses and climbed following data showing the world’s second-largest economy rebounding strongly from the lifting of Covid restrictions.
Commodity currencies rose, with the Australian dollar rebounding from a loss, while the offshore yuan strengthened 0.7%. Oil also rose along with gold.
China’s manufacturing purchasing managers’ index climbed last month to its highest level since April 2012. The figures come ahead of the country’s annual National People’s Congress, with traders expecting to hear more about plans economics of Beijing.
“China is relatively well positioned right now compared to other major economies in terms of the easing cycle,” Elizabeth Kwik, director of Asian equity investments at abrdn, told Bloomberg Television. Any signal of government growth stimulus “will be something good to watch that may come out of the NPC,” she said, referring to congress.
Wednesday’s rebound marks a reversal from recent weeks, when a peak U.S. rate revaluation saw investors sell off just about all risky assets. The Hang Seng China Enterprises index jumped more than 4%, helped by technology and real estate stocks, rebounding from an 11% loss in February.
The latest data “should keep the yuan on a solid footing” ahead of the event, while “commodity currencies such as the Australian dollar may also be supported by expectations of a strong recovery in Chinese demand”, it said. said Wei Liang Chang, strategist at DBS. bank ltd.
A dollar strength gauge extended its loss and Treasury yields edged higher.
Bond yields also rose in Europe on Tuesday after inflation data prompted a reassessment of rate expectations, resuming a theme that dominated trading in a month that saw the Federal Reserve signal its intention to push rates higher than the market had anticipated.
Bond traders no longer view the odds of a Fed rate cut this year as better than equal, a change from what they expected just a month ago. Markets also expect the European Central Bank to raise rates until February 2024, with the ECB terminal rate of 4% fully assessed.
“For the Fed, they want to make sure they’re raising rates and doing their job,” Mary Nicola, multi-asset portfolio manager at PineBridge Investments, told Bloomberg Television. “They might keep going up, but they can keep going up until it starts to hurt and we start to see cracks in the labor market and that’s when it becomes a real difficult situation for the fed.”
Key events this week:
Eurozone S&P Eurozone Global Manufacturing PMI, Wednesday
U.S. Construction Spending, Manufacturing ISM, Light Vehicle Sales, Wednesday
Eurozone CPI, unemployment, Thursday
First unemployment claims in the United States, Thursday
Eurozone S&P Global Eurozone Services PMI, PPI, Friday
Some of the major movements in the markets:
S&P 500 futures rose 0.1% at 6:50 a.m. London time. The S&P 500 fell 0.3%
Nasdaq 100 futures rose 0.2%. The Nasdaq 100 fell 0.1%
Japan’s Topix index rose 0.2%
Hong Kong’s Hang Seng index rose 4%
China’s Shanghai Composite Index rose 0.9%
The Bloomberg Dollar Spot Index fell 0.2%
The euro rose 0.3% to $1.0611
The Japanese yen was little changed at 136.26 per dollar
The offshore yuan rose 0.7% to 6.9063 to the dollar
Bitcoin rose 2.7% to $23,783.34
Ether rose 3.3% to $1,658.1
West Texas Intermediate crude rose 0.8% to $77.63 a barrel
Spot gold rose 0.5% to $1,836.10 an ounce
This story was produced with assistance from Bloomberg Automation.
–With help from Charlie Zhu, Wenjin Lv and Akshay Chinchalkar.
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