Global shares’ rise broadly cheered by US earnings, rally
NEW YORK Wall Street edged up before markets opened early Friday, putting major benchmarks into a position to gain their first week of gains following a seven-week losing streak.
Future contracts of the Dow Industrial Average rose 0.1%, while the S&P 500 rose 0.2%.
After Thursday’s strong quarterly earnings from major retailers, it would take a significant selloff Friday to bring benchmarks back down into negative territory for the week. Major benchmarks are trading between 3.4% to 4.4% for the week heading into Friday’s session.
Investors are closely watching the U.S. retail industry to see if they can find out more about the impact inflation has on consumers and companies. Inflation has reached a four-decade-high and businesses have been increasing prices on everything, from food to clothing, to offset rising costs. On Thursday, there were disappointing results at Dollar Tree, Dollar General and Macy’s. Shares of Dollar Tree jumped nearly 22%, Macy’s rose 19% and Dollar General gained more than 14%.
European shares rose in midday trading Friday, with France’s CAC 40 adding 0.9%, Germany’s DAX up 0.9% and Britain’s FTSE 100 adding 0.3%.
Benchmarks for Asia were higher, with South Korea, Australia, Japan, and China among them.
“Improving risk sentiments on Wall Street, as well as earnings outperformance by Baidu and Alibaba, may help to fuel some upside in the Asia region today’s session,” said Yeap Jun Rong (market strategist at IG) in Singapore.
Shares of Alibaba and Baidu surged after they reported better than expected results, easing some concerns about the negative impact from restrictions to curb COVID-19 infections. Both shares rose.
Gauging Japan’s economic path will be on investors’ minds as data on manufacturing and housing for April will be released next week. Analysts expect that the numbers will be dimmed due to a slowdown of exports to China during this period.
But some optimism is also in the air, with Tokyo’s restrictions on tourists easing and the daily cap raising from 10,000 incoming people to 20,000 starting June 10. Fumio Kishida (Prime Minister) is leading the Japanese government in parliamentary negotiations with a supplementary budget. This could be a plus for investors.
Japan’s benchmark Nikkei 225 added 0.7% to finish at 26,781.68. Australia’s S&P/ASX 200 surged 1.1% to 7,182.70. South Korea’s Kospi jumped 1.0% to 2,638.05. Hong Kong’s Hang Seng surged 2.9% to 20,697. 36, while the Shanghai Composite edged up 0.2% to 3,130.24.
Moody’s Investors Service lowered the 2022 growth projections for G-20 economies to 3.1% in 2022, down from 5.9% growth in 2021. The latest forecast is half of the 3.6% growth that was projected in March. Moody’s stated that China’s slowing economic activity is due to its “zero COVID” policy. The impact of Russia’s invasion in Ukraine has worsened inflation by fueling higher energy prices and key food commodity costs. Supply chain problems worsened in the wake of China’s lockdown for several major cities as it tried to contain COVID-19 cases.
Consumers are resilient about spending but the pressure of inflation continues to be a problem. This could lead to a pullback in spending or a shift from more expensive items to necessities.
In energy trading, U.S. benchmark crude slipped 74 cents to $113. 35 a barrel. U.S. crude oil prices rose 3.4% Thursday, and are up more than 55% for the year. Brent crude, the international standard, lost 67 cents to $113. 50 a barrel.
In currency trading, the U.S. dollar inched down to 126. 95 Japanese yen from 127. 10 yen. The euro cost $1. 0716, now $1 .0733.
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