Stocks rise as China cuts quarantine; dollar steady

Bloomberg

Stocks rise on Tuesday after China softened its strict Covid-19 protocols, easing investor concerns about global growth.
Mining and energy shares led gains in Europe’s Stoxx 600, while US equity futures advanced about 0.6%. An Asian equity index erased losses to climb for a fourth session.
China cut in half the time new arrivals must spend in isolation, the biggest shift yet for a pandemic policy that has left the country isolated and fuelled economic concerns. Iron ore and copper reversed losses, while oil gained for a third session amid the risks of the supply disruptions.
Treasuries dipped, a dollar gauge was little changed and commodity-linked currencies strengthened.
Still, rallies in risk assets have proved fleeting this year as higher borrowing costs to fight inflation restrain economic
activity in a range of nations.
European Central Bank President Christine Lagarde affirmed plans for an initial quarter-point increase in interest rates in July, but said policy makers are ready to step up action to tackle record inflation if warranted.
Some analysts also argue still-bullish earnings estimates are too optimistic.
Earnings revisions are a risk with the US economy set to slow next year, though China emerging from Covid-19 strictures could act as a global buffer, according to Lorraine Tan, Morningstar director of equity research.
“You got a US slowdown in 2023 in terms of growth, but you have China hopefully coming out of its lockdowns,” Tan said on Bloomberg Radio.
Meanwhile, the People’s Bank of China pledged to keep monetary policy supportive to help the nation’s economy. It signaled that stimulus would likely focus on boosting credit rather than lowering interest rates.
In the Bavarian Alps, limiting Russia’s profits from rising energy prices that fuel its war in Ukraine have been among the main topics of discussion at a Group of Seven summit. G-7 leaders agreed that they want ministers to urgently discuss and evaluate how prices of Russian oil and gas can be curbed.
The Stoxx Europe 600 rises 0.7% as of 10 am London time and futures on the S&P 500 also climb as much as 0.6%.
While futures on the Nasdaq 100 advanced 0.6%, futures on the Dow Jones Industrial Average also gain 0.6%. The MSCI Asia Pacific Index rises 1.5% and the MSCI Emerging Markets Index climbs 1.6%.
The Bloomberg Dollar Spot Index falls 0.1% and the euro was little changed at $1.0591.
While the Japanese yen falls 0.2% to 135.70 per dollar, the offshore yuan rises 0.2% to 6.6820 per dollar and the British pound also climbs 0.1% to $1.2283.
The yield on 10-year Treasuries was little changed at 3.21% and Germany’s 10-year yield advanced five basis points to 1.60%. Britain’s 10-year yield advanced five basis points to 2.44%.
Brent crude rises 1.3% to $116.63 a barrel and spot gold also climbs 0.2% to $1,826.62 an ounce.