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Stocks in Asia and US futures advanced yesterday after China eased some virus curbs and Wall Street had its best week since November 2020.
Japanese and Hong Kong equities led gains. Nasdaq 100 contracts climbed more than 1 percent and S&P 500 futures were also up in a sign the bounce may have further to run.
The S&P 500 wiped out its May losses and snapped a string of seven weekly declines as institutional investors rebalanced portfolios into the end of the month. European contracts climbed. China’s yuan outperformed after the nation reported fewer Covid-19 cases in Beijing and Shanghai. That spurred the government to ease some of the strict virus controls to stimulate sagging growth.
Chinese stocks had more modest gains as reopening plans sparked advances in some sectors like consumer and travel.
The dollar slipped for a third day versus major peers as havens lost their appeal amid the improved mood. Oil traded near US$116 a barrel as the European Union failed to agree on a revised package of Russian sanctions. Cash Treasuries weren’t trading because of the US Memorial Day holiday.
Traders are pondering whether the bottom of the selloff is near as investors have been buying the dip after one of the worst starts to the year for equities. However, a wall of worries remains from hawkish central banks underscoring fears of a recession, escalating food inflation from the war in Ukraine and China’s lockdowns stunting economic activity.
“We are in the middle of a bear market rally,” said Mahjabeen Zaman, Citigroup Australia head of investment specialists, said on Bloomberg Television. “I think the market is going to be trading range bound trying to figure out how soon is that recession coming or how quickly is inflation going down.” She added that Treasury yields are set to peak this year.
Traders will be looking to the US payroll numbers later this week to gauge the Federal Reserve’s tightening path as it strives to rein in inflation. Meanwhile, the Fed is set to start shrinking its US$8,9 trillion balance sheet starting Wednesday.
Elsewhere, Asia’s coal benchmark rallied to the highest level on record as India moved to secure shipments, tightening supplies in the region. — Bloomberg.
Online Reporter