Thu. Jan 27th, 2022

The UK’s FTSE 100 led European equities higher on Tuesday after survey data showed that China’s major manufacturing industry had not been significantly derailed by the Omicron coronavirus variant.

The blue-headed UK equities index, dominated by energy, resources and financial equities responding well to signs of strong global growth, rose 1 percent in early trades. London’s markets were closed for a banking holiday on Monday, meaning British shares were also catching up after missing significant gains in Europe that day.

Europe’s local Stoxx 600 stock meter added a further 0.6 per cent on Tuesday, building on a record high set in the previous trading session.

A Purchasing Managers’ Index for China’s Manufacturing Sector, manufactured by Caixin and Markit, rose to a higher than expected reading of 50.9 for December. It drove the index, which collects managers’ answers to questions on topics such as rental plans and new orders and shows expansion when it rises above 50, to its highest level since June.

The growth, says Caixin Insight Group senior economist Wang Zhe, indicated that “the impact of widespread Covid-19 flares is under control”. Investors were worried about coronavirus exclusions in China squeezing global supply chains and pushing inflation higher.

On Wall Street, futures markets indicated that the S&P 500 stock index would open 0.2 percent higher after closing at a record high on Monday, pulled up by gains for Apple and electric car maker Tesla.

Apple’s market capitalization rose to $ 3 billion on Monday, making it the first company ever to achieve this valuation, highlighting analysts’ concerns that the S&P’s performance has become too dependent on a small group of large technology companies through the pandemic has intensified. .

“The U.S. economy appears to be deep in its business cycle, typically limiting market leadership to mega-equity stocks,” said Tan Kai Xian, analyst at Gavekal, arguing that rising U.S. wages would exacerbate this trend.

“At such moments, firms that work on thin margins are most hurt and can make a loss. “In contrast, firms with a larger margin can continue to grow,” he said.

“If the crutch of big technology has been kicked off, beware,” added Patrick Spencer, vice president of equities at RW Baird. “The concern is that one of these very large technology stocks is falling and it’s starting a waterfall of sales.”

In debt markets, US treasury prices followed steadily sharp falls Monday when traders withdrew from the assets, which are sensitive to expectations of higher interest rates and inflation.

The yield on the 10-year note benchmark, which is reversing its price, was flat at 1,623 percent after rising more than 0.13 percentage points in the previous session. Germany’s equivalent Bund yield, which determines borrowing costs in the eurozone, was stable at minus 0.132 percent.

In Asia, Tokyo’s Nikkei 225 closed 1.8 percent higher while Hong Kong’s Hang Seng index was flat.

Brent crude, the oil benchmark, was steady at $ 78.93 a barrel before a meeting of Opul + producer groups.

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