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Equity markets edged higher in cautious trade on Tuesday, hemmed in by risks including upcoming company earnings and the outcome of this week’s central bank meetings.
The Stoxx Europe 600 rose after a shaky start, while contracts on the Nasdaq 100 index gained as much as 0.4%, following a weak session following a reweighting of constituents.
Investors appear unwilling to place big bets, given uncertainty over what signals Federal Reserve and European Central Bank policymakers might send, with the Fed’s potential policy path, especially, crucial for global markets. Adding to jitters, global companies with a combined $27 trillion in value are reporting results this week, including Microsoft Corp, LVMH and Google parent Alphabet Inc later on Tuesday.
“Investors are unlikely to feel safe enough to get into the equities water before such an eventful week,†Mizuho International Plc strategists Evelyne Gomez-Liechti and Helen Rodriguez wrote in a note.
A key euro zone bank lending survey showed a record plunge in loan demand from the bloc’s companies. Alongside a dismal business outlook reading from Germany, the data raise questions over the ECB’s capacity to hike interest rates much beyond the 25 basis points priced for the meeting.
In the US, however, hopes have grown that the economy will be able to escape a sharp recession. That’s lifted the Dow Jones Industrial Average 5% so far this month, as investors price a better outlook for companies making industrial equipment and heavy machinery.
On the European earnings front, consumer goods giant Unilever Plc stood out, climbing as much as 5.1% after a sales beat. Spirits group Remy Cointreau surged 7.7% as booming China sales lifted its revenues in the first quarter. However, French software maker Dassault Systemes SE plunged after underwhelming results and Bayer AG dropped 2.5% after cutting guidance.
Chinese leaders have used this week’s Politburo meeting to flag more aid to the economy, lifting Hong Kong-listed technology shares, while a Chinese property stock gauge was on course to post the biggest gain since December. US-listed Chinese stocks extend their rally in premarket trading.
The stimulus signal also boosted emerging market stocks as well as resources companies, with miners Anglo American Plc and Rio Tinto Plc gaining more than 3%. Steel-making staple iron ore rose as much 1.9% in Singapore, while copper extended gains.
On currencies, the offshore yuan advanced to its strongest level in more than a week, while the Australian dollar, which is sensitive to China’s growth outlook, gained 0.3%.
The Stoxx Europe 600 rose 0.2% in London. S&P 500 futures rose 0.1%. Nasdaq 100 futures rose 0.4%. Futures on the Dow Jones Industrial Average were little changed. The MSCI Asia Pacific Index rose 1.3%. The MSCI Emerging Markets Index rose 1.7%.
The Bloomberg Dollar Spot Index fell 0.1%. The euro was little changed at $1.1055. The Japanese yen was little changed at 141.36 per dollar. The offshore yuan rose 0.6% to 7.1426 per dollar. The British pound rose 0.1% to $1.2843. Bitcoin rose 0.2% to $29,189. Ether rose 0.3% to $1,855.61.
The yield on 10-year Treasuries advanced one basis point to 3.89%. Germany’s 10-year yield advanced two basis points to 2.44%. Britain’s 10-year yield was little changed at 4.26%. Brent crude fell 0.3% to $82.46 a barrel. Spot gold rose 0.4% to $1,963.07 an ounce.