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Global Stocks Waver Ahead of Europe, U.S. Economic Data

Global stocks paused Tuesday, halting early-week declines that had been sparked by rising anxieties over the health of global economic growth.

The Stoxx Europe 600 was flat in the opening minutes of trade, with gentle gains for its telecoms sector balancing slight pressure on the index’s autos sector.

Inspection and testing company Intertek Group was one of the index’s sharper fallers, sliding 3.4% after reporting its full-year results.

With investors treading water in anticipation of a trade deal between the U.S. and China, market focus has in recent sessions returned to the uncertain outlook for many of the world’s major economies.

European investors were awaiting a slew of economic indicators due Tuesday morning, amid a lack of fresh developments in global trade. The Wall Street Journal reported Sunday that the U.S. and China were in the final stages of completing a trade deal after months of bargaining, but some media reports have cited a sticking point on enforcement as holding up further progress.

European data is expected later Tuesday, after unofficial Chinese services purchasing managers index for February slumped to its lowest since October, undershooting market expectations.

Still, with the Shanghai Composite Index up 0.9% and the more volatile Shenzhen A-Share up 2.3%, Chinese stocks bucked a wave of shallow selling across most other major Asian indexes. Japan’s Nikkei 225 was down 0.4% and the South Korean Kospi was down 0.5%.

The uptick in China also came despite the National People’s Congress announcing a cut to Beijing’s official growth target, down from 6.5% to between 6% and 6.5%.

“Guiding for slower growth is sensible,” said Paul Donovan, global chief economist at UBS Wealth Management in a note. “The government also announced some tax cuts today to smooth the move to lower growth.”

Seemingly contradictory messages from Beijing–the government has vowed to continue deleveraging the economy while simultaneously pursuing supportive stimulus measures–have left investors less gloomy about the prospects of the world’s second largest economy.

“The perception that existed three months ago of a progressively slower China has at the margins turned into a more positive view of where that economy will be in the second half of the year,” said David Donabedian, chief investment officer at CIBC U.S. Private Wealth Management.

In the U.S., futures put the S&P 500, the Dow Jones Industrial Average and the Nasdaq-100 on course for flat opens, after skittishness over trade prompted the worst day for the Dow and S&P 500 since Feb. 7.

Aside from watching trade developments, U.S. investors were awaiting U.S. economic figures including home sales, which “will get some attention because they’ve been one of the weak links in the U.S. economic story over the last year and a half,” according to CIBC’s Mr. Donabedian.

The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was last up 0.2%.

Traders were also looking out for corporate earnings reports from Target and Kohl’s, due before the U.S. market open.

Source: Dow Jones

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