Investors unfazed by mixed economic data out of the Eurozone
US stocks ended higher on Monday, with financial sector leading the gains. JPMorgan stocks jumped more than 16% after the bank offered an updated guidance. According to the presentation, the lender noted that a 17% return on tangible common equity remains our target and may be achieved in 2022. After flirting with bear-market territory earlier, the S&P 500 rallied nearly 2% as well as the Dow Jones, while the tech-heavy Nasdaq Composite gained 1.6%.
However, Asian stocks came under pressure on Tuesday as risk demand abated quickly, with US stock index futures turning negative after a short-lived relief rally. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.8% while the Nikkei 225 gave up nearly 1% after the data showed that Japan’s manufacturing activity grew at the slowest pace in three months in May. In China, Shanghai Composite gave up 2.4% while Hong Kong’s Hang Seng fell 1.87%.
Joining global sell-off, European equities opened sharply lower on Tuesday as growth worries reemerged. The pan-European STOXX 600 index tumbled 1% in early deals. On the data front, Germany’s May flash manufacturing PMI came in at 54.7 versus 54.0 expected while Eurozone’s flash services PMI arrived at 56.3 versus 57.5 expected. Mixed figures did little to help investor sentiment, with selling pressure persisting across the board.
Despite risk aversion, the safe-haven dollar continues to lose ground. The USD index derailed the 102.00 handle for the first time in a month to notch fresh local lows around 101.75 in recent trading. As such, EURUSD rallied to monthly highs around 1.0735, retaining a solid bullish bias during the European hours. The next upside target now arrives at 1.0800. In a wider picture, however, the common currency remains within a bearish trend at this stage.