© Reuters. Empty prices are displayed in a stock quote sheet at the Tokyo Stock Exchange (TSE) after the TSE suspended trading due to a system problem in Tokyo, Japan October 1, 2020. REUTERS / Issei Kato / Files
By Herbert Lash
NEW YORK (Reuters) – A gauge of global stock markets recovered and U.S. Treasury yields rose on Tuesday as China eased its crackdown on technology and COVID-19 and sales Solid US retail sales in April suggest that economic growth is likely to get stronger.
The Commerce Department said retail sales rose 0.9% last month while data for March was revised higher to show sales rose 1.4% instead of 0.7% as expected. previously reported, the Commerce Department said.
According to Jeffrey Roach, chief economist at LPL Financial (NASDAQ:), US consumers have weathered inflation as sales rose for a fourth straight month. Sales are nominal, so most of the increase is due to higher prices, he said.
“If price pressures can be just enough to ease pressure on consumers, we expect economic growth to pick up again in the second quarter,” Roach said in an email.
US and European stocks rallied, following a positive start to the night in Asia. The MSCI Global Stocks Index gained 1.14%, while the pan-European index gained 0.96%.
On Wall Street, the gain was 0.38%, up 0.79% and up 0.93%.
Anthony Saglimbene, global market strategist at Ameriprise Financial (NYSE:), said the rally was partly a response to oversold conditions after the Nasdaq and S&P 500 posted sixth consecutive weekly losses on last week.
“There’s this battle in the stock market between what breaks first: inflation or the consumer,” he said. “The stock market is betting that consumers will break, and the credit market is betting that that will. Inflation will break first,” he said.
“The stock market is getting close to over-devaluation and the probability of a recession, which I think is too high,” said Saglimbene.
The data also showed industrial production rose 1.1% in April, with manufacturing capacity utilization at its highest level since 2007. The industry is overheating and needs to slow down to control inflation, said Bill Adams, chief economist at Comerica (NYSE) 🙂 Bank.
The Federal Reserve will raise the federal funds rate by half a percentage point at each of its next two policy meetings to throw sand in the gears of the economy, Adams said in an email.
Futures markets are pricing in consecutive 50-basis-point rallies in June and July, putting the US benchmark interest rate at 2.75% by year-end.
Yields on top rose 6.9 basis points to 2.948%.
The dollar fell for a third straight day, pulling back from two-decade highs against a basket of major currencies, as increased appetite for risky bets dented its appeal. safe-haven lead of the greenback.
Copper fell 0.691%, with the euro up 0.94% to $1.0529. The Japanese yen weakened 0.05% to 129.22 per dollar.
MSCI’s broadest index of Asia-Pacific stocks outside of Japan is up 2.5%, but the index is still down 16.8% so far this year.
Concerns remain about the strength of the world’s two largest economies after weak retail and factory data in China and some disappointing US manufacturing data..
An index compiled by US bank Citi that tracks whether economic data is better or worse than economists expect is back in the negative territory.
Oil hit a seven-week high, supported by the European Union’s continued push for a ban on Russian oil imports that will tighten supply and as investors focus on higher demand from easing. loosen China’s COVID lockdown.
up 0.64% to $114.93 a barrel and at $114.90, up 0.58% on the day.
Gold prices stabilized as a weaker dollar supported demand for greenback-denominated bullion and countered pressure from a rebound in US Treasury yields. fell 0.3% to $1,818.23 an ounce. [GOL/]
Hopes that China can ease two key groupings of restraints created positive sentiment in equities early Tuesday.
Shanghai has hit the long-awaited milestone for three days in a row with no new COVID-19 cases outside of quarantine, which could lead to the beginning of the lifting of harsh embargoes. of the city.
Mainland China’s CSI300 was up 1.25% while Hong Kong’s was up 3.27%, as tech companies listed in the city rose nearly 6% on hopes of Beijing’s crackdown on the virus. with the sector being eased.