Global Stocks Rise as Fresh Economic Data Point to Recovery

Global stocks rose Tuesday as investors cheered indicators showing that manufacturing and services sectors around the world have started to recover as lockdowns ease.

Futures tied to the S&P 500 gained 0.8%, suggesting that U.S. stocks may continue to edge higher after the opening bell. The preliminary results for the June surveys of American purchasing managers, due to be released at 9:45 a.m. ET, are expected to show that a contraction in the manufacturing and services sectors is easing.

The pan-continental Stoxx Europe 600 rose 1.4% after data from France suggested a stronger-than-expected recovery after lockdown measures were lifted. Activity levels in the broader eurozone also improved to their highest level since February, though the indicators continued to signal a contraction.

“What matters is acceleration in the growth rate of this data. We weren’t expecting to see the acceleration for a few months, but there are signs that we’re already getting some now,” said Sebastien Galy, a macro strategist at Nordea Asset Management. “That’s very positive for the equity market.”

Overnight, U.S. futures and Asian stock markets were buffeted by conflicting signals from the Trump administration on the trade deal with China. White House trade adviser Peter Navarro sparked confusion among investors when he told Fox News that the agreement was “over” in a Monday evening interview. President Trump then tweeted to say the deal was “fully intact.”

By the close of trading, the Shanghai Composite Index gained 0.2% and Hong Kong’s Hang Seng Index climbed 1.6%.

Markets have been spooked in recent weeks by signs of deterioration in the U.S.-China relationship, so Mr. Trump’s clarification “was very important for it not to go back to a crisis mode,” said Stephane Monier, chief investment officer of Lombard Odier. Investors are closely scrutinizing the power struggle between the two largest economies in the world, he said.

Lombard Odier is planning to increase its holdings of Chinese equities and bonds, he said.

In European stocks, French car makers rallied from the boost in optimism resulting from the country’s better-than-expected manufacturing data. Share of Peugeot rose 6.3% and Renault advanced 7%.

In bond markets, the 10-year Treasury yield edged up to 0.727%, from 0.704% Monday. Bond prices fall as yields rise.

Investors are looking ahead to the release of new home sales in the U.S., which will be out at 10 a.m. The data will be interpreted as an indication of consumer confidence, according to Georgina Taylor, a multiasset fund manager at Invesco.

“It’s one thing to turn a factory back on but does everyone feel comfortable going out and spending money? Consumer confidence plays a part in that,” Ms. Taylor said. She’s expecting to see a longer-term trend emerge where more people move out of city centers as they increasingly work from home.
Source: Dow Jones