Global Markets Take a Breather as Investors Await China’s Next Move
Asian equities retreated on Tuesday, mirroring losses in the US, as market participants shifted their focus to China’s reopening after a week-long holiday. The spotlight is on the nation’s top economic planner, who is set to brief at 10 am local time, with investors eagerly awaiting further policy measures to support the economy.
Despite a recent surge in Chinese shares, fueled by a slew of stimulus measures, some investors remain skeptical about the sustainability of the rally. JPMorgan Asset Management’s Kerry Craig noted that while there is support for the market, there is a risk of disappointment if the fiscal package doesn’t meet expectations.
Meanwhile, the S&P 500 fell 1% on Monday, snapping a four-week winning streak, as tech stocks led the decline. Geopolitical tensions, particularly in the Middle East, continue to weigh on investor sentiment, with Brent crude soaring above $80 a barrel.
In the US, Treasury yields climbed to 4%, driven by Friday’s solid jobs data, which has reduced expectations of a 50-basis-point rate cut in November. The crisis in the Middle East has also sparked concerns about the potential for further escalation, which could trigger a risk-off trade.
Despite the uncertainty, two top Wall Street strategists have turned more optimistic, citing signs of a robust labor market, economic resilience, and easing interest rates. Morgan Stanley’s Michael Wilson and Goldman Sachs’ David Kostin have upgraded their views on cyclical stocks and the benchmark S&P 500, respectively.
This week, investors will be watching key events, including Fed speeches, minutes, and US initial jobless claims, CPI, and PPI data. Earnings season for big Wall Street banks will also kick off, with JPMorgan and Wells Fargo set to report on Friday.
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