Chinese Stocks Lead Gains In Global Markets As US Heads Into Presidents Day

Global markets were mixed on Monday, with US futures struggling for direction in holiday trade ahead of another busy set of economic data.

Futures linked to the S&P 500 were down 0.1%, as were those linked to the Dow Jones Industrial Average. Contracts linked to the technology-focused Nasdaq-100 gained 0.1%. US stock and bond markets are closed on Monday to mark President’s Day.

Chinese markets led global gains while European indices were subdued.

This week’s data could provide a hint as to how stubborn US inflation is likely to remain in the near term and how sustained economic growth is – two crucial questions for investors trying to assess the outlook for central bank policy and corporate earnings.

“There’s this new narrative that we’re going to see inflation pause before it falls,” said Edward Park, chief investment officer at British investment firm Brooks Macdonald. “The more persistent inflation is, the tougher the Federal Reserve has to crack down.”

Stocks could be weighed down by growing concerns about US interest rate hikes, said Mark Matthews, Julius Baer’s head of research for Asia.

“The market could be susceptible to a little panic attack,” Matthews said. Given the strength of the US economy, there are concerns that inflation could ease at a slower-than-expected pace, he added.

Two Fed officials said last week they supported a bigger rate hike at the Fed’s February meeting than the Fed’s quarter-point hike, and two sets of inflation data also came out hotter than expected. The minutes of this Fed meeting are scheduled to be released on Wednesday.

S&P Global’s monthly surveys of manufacturing and service sectors around the world are due Tuesday. And the Commerce Department is due to release its personal consumption price index on Friday — a measure of inflation closely monitored by the Fed. Another measure, the consumer price index, showed that annual inflation cooled slightly in January, although the pace of moderation has flattened.

Friday action in New York where stock markets are closed on Monday for Presidents Day.

Photo: BRENDAN MCDERMID/Portal

Quarterly results from big companies like Walmart, Home Depot and Chinese tech giant Alibaba will also be released this week.

In Europe, the pan-continental Stoxx Europe 600 was up 0.2% on Monday.

In Asia, China’s broad CSI 300 index ended up 2.5%, its largest single-day gain this year. The Shanghai Composite Index rose 2.1% and Hong Kong’s Hang Seng Index rose 0.8%.

The gains came after China’s central bank said lenders had left the country’s interest rates unchanged as the world’s second-largest economy showed more signs of recovery after Covid reopening.

In a report Monday, Goldman Sachs forecast that the MSCI China Index will rise 24% from current levels by the end of the year if the country returns to growth. “Covid is probably in the rearview mirror in China now,” analysts at the US bank wrote.

Diplomatic tensions between the US and China are rising again, with senior officials from Beijing and Washington exchanging barbs over the downed Chinese balloon amid a tense atmosphere of public speeches and a secret meeting on Saturday.

“It has only become more apparent that these tensions have not gone away,” said Kerry Craig, global markets strategist at JP Morgan Asset Management in Melbourne. “You can’t get out of geopolitics as an investor these days.”

Nonetheless, Mr Craig said China’s potential for economic growth, consumer-driven demand and attractive valuations still trump lingering geopolitical concerns.

In India, the S&P BSE Sensex Index lost 0.5%, putting it in negative territory for 2023. Shares of most Companies linked to billionaire Gautam Adani retreated, with his conglomerate’s flagship, Adani Enterprises, falling nearly 6%.

Almost a month ago, the US short seller Hindenburg Research published a report in which the Adani Group was accused, among other things, of having manipulated share prices. The report triggered a sell-off of over $100 billion in stocks bearing the Adani name. The conglomerate has denied the claims.

Write to Dave Sebastian at [email protected] and Caitlin Ostroff at [email protected]

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