Chinese authorities promised to scale up economic stimulus, adding to investor optimism
US stock indexes rallied on Thursday as investors cheered upbeat corporate earnings while extending recovery from a recent sell-off witnessed earlier in the week. Market players shrugged of the report that showed that the US economy unexpectedly shrank for the first time since 2020. The S&P 500 gained more than 2%, the Dow Jones gained 1.85%, and the Nasdaq Composite jumped 3% as Meta Platforms surged nearly 18% in the biggest rally in nearly ten years amid better-than-expected Q1 financial results. Adding to investor optimism, PayPal rose 11.5%, despite the company lowering its full-year profit outlook.
Following suit, Asian stock markets advanced on Friday, with month-end flows adding to the upbeat tone in the region. Shanghai Composite rose 2.41% after Chinese authorities promised to scale up economic stimulus amid the worst outbreaks of COVID-19 since the pandemic began. The South Korean Kospi added 1%, while Australia’s S&P/ASX 200 advanced 1.06%. Tokyo was closed for a holiday.
European equities opened higher but the momentum looked fairly modest as investor optimism started to abate. The Stoxx Europe 600 Index climbed 1% in early deals as China’s announcement brought some relief for global markets. On the negative side, Henkel stocks fell more than 7% after the German company cut its 2022 profit forecast, citing rising material costs. US equity futures pared losses, suggesting the indexes could proceed to a downside correction ahead of the weekend.
In currencies, the USD index came off long-term peaks seen just below the 104.00 figure on Thursday. The index has settled below 103.00 during the early European hours and could see a deeper retreat amid the overbought conditions. It looks like the buck should slid to lower levels in order to attract the renewed buying pressure in the coming days. EURUSD bounced back above 1.0500, now targeting the 1.0600 figure that represents the immediate barrier for bulls.
