Stocks climbed on Tuesday as investors shook off concerns over US coronavirus outbreaks and focused on the prospect of a global economic rebound.
Japan’s benchmark Topix index rose 1.2 per cent in early trading as Australia’s S&P/ASX 200 gained 1.3 per cent. China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks was up 0.8 per cent while Hong Kong’s Hang Seng added 0.9 per cent.
Futures markets tipped the S&P 500 to climb 0.2 per cent when US trading begins later in the day.
Overnight, the Wall Street benchmark closed 1.5 per cent higher as traders bet that the rash of outbreaks in states that were early to roll back lockdown measures could be contained. Arizona has joined Texas and Florida in reversing its reopening in the face of one of the worst outbreaks of new coronavirus cases in the country.
The number of new coronavirus cases in the US fell below 40,000 for the first time in four days on Monday, but states in the west and south of the country remain on high alert.
Investors in the US were cheered by upbeat economic data, which showed a record monthly rise in pending home sales last month as coronavirus lockdowns began to ease.
Chris Varvares, co-head of US economics at IHS Markit, said it was “too early to tell” whether the recent jump in US coronavirus cases and deaths would lead to mandatory lockdowns and a further economic contraction later in the year.
“We are watching very closely the course of the pandemic and looking for a tipping point,” he said.
Chinese equities were buoyed by a pick-up in activity at the country’s factories, with the official manufacturing purchasing managers’ index beating economists’ predictions in June.
“Admittedly [Chinese] exports look ripe for a pullback despite the improvement in export orders last month,” said Martin Rasmussen, China economist at Capital Economics. But he said rapid government bond issuance would underscore infrastructure spending and “help keep the recovery on track”.
Oil prices slipped after rallying on Monday following positive economic data from China and Europe. Brent crude, the international benchmark, fell 0.6 per cent to $41.46 a barrel, while US marker West Texas Intermediate dropped 0.7 per cent to $39.44 a barrel.
Warren Patterson, head of commodities strategy at ING, said that US inventory numbers due out later on Tuesday were expected to show a decline of 750m barrels over the last week, while any hit to petrol demand from renewed restrictions in Texas and other states “will likely be reflected in next week’s release”.