Tue. Oct 19th, 2021

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US equities were on track to return Tuesday’s losses as solid economic data and rising oil prices helped reduce investors’ pessimism about the pace of economic recovery.

Wall Street’s blue-chip S&P 500 index rose 0.7 percent early Wednesday afternoon, while the tech-heavy Nasdaq Composite rose 0.5 percent. Profits were broad, with energy supplies and growth-sensitive sectors such as finance and industry the biggest gains.

The progress came because data from the Federal Reserve showed that U.S. industrial production was still increasing in August, despite a sharp slowdown in growth due to the impact of Hurricane Ida. Separate data from the Bureau of Labor Statistics also show the first monthly drop in import prices since October last year, which supports the view that the recent jump in inflation will be temporary.

As a further sign of a slight shift to riskier assets in the US, the ten-year yield on the U.S. Treasury — which rises as prices fall — added 0.03 percentage points to 1,312 percent.

The optimism in the US was in contrast to European and Asian markets. The Europe-wide Stoxx 600 fell 0.8% to its lowest closing price in more than a month. The British FTSE 100 closes 0.3%, while the CAC 40 in France drops by 1% and the Xetra Dax in Germany by 0.7%.

“One is confronted with the fact that the world economy is deteriorating somewhat faster than expected from China to the United States and possibly in Europe,” said Sebastien Galy of Nordea Asset Management.

“Chinese retail sales have been surprisingly weak due to the spread of Covid-19, holidays and probably a feeling that the rise in China’s debt is coming to an end in part through speculation in the real estate market,” he added.

China’s retail sales rose 2.5 percent in August from the same month last year, a report Shown Wednesday as the country handled the outbreak of the Delta variant of Covid-19. Economists polled by Reuters expected growth to rise by 7%.

Chinese homebuilder Evergrande, debt-ridden, on Tuesday hired restructuring advisers to help it through a liquidity crisis after nearly halving its monthly sales from June to August.

A survey of 258 asset managers at Bank of America found that a net 13 percent expect global economic growth to rise, the lowest amount since April 2020.

U.S. retail sales have unexpectedly sharp 1.1 percent in July from June as Delta coronavirus cases increased. Airlines also reported demand delayed while large employers from Microsoft to Ford plans postponed to return workers to offices.

Brent crude, the oil benchmark, rose 2.6 percent to $ 75.52 a barrel after Hurricane Ida shut down U.S. refineries and rising natural gas prices sparked speculation about energy consumers switching from gas to oil. Energy shares listed on the S&P 500 rose 3.3%.

“If US supply disruptions are indeed a temporary buffer for prices amid a slowdown in global oil demand recovery, then prices pose an immediate downward risk as weather conditions calm on production,” said Rystad analyst Nishant Bhushan. Energy, said.

In Asia, Hong Kong’s Hang Seng index fell 1.8 percent in the third consecutive fall, taking its loss to about 12 percent over the past three months. The CSI 300 index of Chinese mainland equities fell 1%.

The dollar index, which measures the U.S. currency against six others, fell 0.1 percent. Sterling rose 0.2 percent against the dollar to $ 1.3837 after British inflation rises to an annual rate of 3.2 per cent, rising expectations for the Bank of England raising interest rates from its record low.

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