Stocks rise, futures steady as China concerns ease

Bloomberg

Stocks in Europe rose on Wednesday as concerns over China’s gaming and technology clampdown eased, countering lingering worries about the spread of the Covid-19 delta strain and its effect on the global recovery.
Technology shares led the charge as the Stoxx Europe 600 index climbed for a third day to a fresh record. The travel and leisure sector also outperformed as shares of online gaming companies recovered after Chinese state media toned down their criticism of the industry. The euro declined after a European Central Bank policy maker said the central bank won’t rush a decision on stimulus.
Meanwhile, earnings continued to roll in with Commerzbank AG shares dropping after a disappointing result. Homebuilder Taylor Wimpey Plc jumped after saying it expects to deliver 2021 full-year operating profit above the top end of consensus, while satellite firm SES SA and coffee group JDE Peet’s NV gained after positive updates.
US equity contracts were steady in the wake of a record S&P 500 close on robust earnings. The 10-year US Treasury yield held its retreat, while Japan’s 10-year yield fell to zero for the first time since December. The dollar was steady against a basket of major peers. WTI crude oil hovered around $70 a barrel.
Solid earnings and expectations of continuing central-bank stimulus have propelled US and European shares to all-time highs, weathering the spread of the delta variant as well as a burst of inflation attributed to pandemic-linked bottlenecks. In comparison, the mood in Asia is more somber, with analysts reviewing economic growth projections for China as officials there grapple with the broadest Covid-19 outbreak since the beginning of the pandemic.
“Aside from the healthy earnings outlook, we also see equities being supported by continued monetary stimulus from the Federal Reserve and the attractiveness of stocks relative to low bond yields,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
Equities rallied in Hong Kong but slipped in Japan, where SoftBank Group Corp retreated on a potential block of its $40 billion sale of Arm Ltd to chip company Nvidia Corp. Investors continue to assess regulatory risks in China as Beijing pushes on with a crackdown on technology giants. Alibaba Group Holding Ltd’s revenue missed estimates for the first time in over two years, a sign of the clampdown’s toll.
Key US jobs data this week could stoke market swings if they lead investors to adjust expectations over the Federal Reserve’s likely timeline for eventually tapering stimulus. Fed Vice Chair Richard Clarida is due to speak about monetary policy on Wednesday.
Treasury quarterly refunding announcement was expected on Wednesday. Federal Reserve Vice Chair Richard Clarida was due to speak on Wednesday.
Bank of England is expected to keep its benchmark interest rate and its bond-buying target unchanged on Thursday. Reserve Bank of India monetary policy decision, briefing on Friday. The US jobs report is expected to show another robust month of hiring on Friday.
The Stoxx Europe 600 rose 0.5% in London. Futures on the S&P 500 were little changed. Futures on the Nasdaq 100 were little changed. Futures on the Dow Jones Industrial Average fell 0.1%. The MSCI Asia Pacific Index rose 0.4%. The MSCI Emerging Markets Index rose 0.9%.
The Bloomberg Dollar Spot Index was little changed. The euro fell 0.1% to $1.1852. The Japanese yen fell 0.1% to 109.17 per dollar.