Concerns surrounding Nancy Pelosi’s visit to Taiwan waned
After a two-day slide, Wall Street stocks reversed on Wednesday to trim recent losses due to upbeat economic updates that helped ease recession worries. The ISM non-manufacturing PMI came in at 56.7, above 55.3 in June versus 54 expected. Factory orders also exceeded expectations, rising 2% versus the expected gain of 1.2%. Adding to a more upbeat tone, Fed’s Bullard said that he doesn’t think the US is currently in a recession. Against this backdrop, the Dow Jones Industrial Average rose 1.29%, the S&P 500 gained 1.56%, and the Nasdaq Composite increased 2.59%.
Asian equities advanced on Thursday as concerns surrounding Nancy Pelosi’s visit to Taiwan waned. MSCI’s broadest index of Asia-Pacific shares gained 0.5% while Japan’s Nikkei 225 added 0.69%. Leading gains in the region, Hong Kong’s Hang Seng added 1.8% as Alibaba rallied 4.6% ahead of its second quarter results due later today. However, should the figures disappoint, the company’s shares may give up the latest gains on Friday.
In Europe, stocks opened marginally higher, with US stock index futures paring early losses, suggesting positive risk sentiment could persist in the near term. The pan-European Stoxx 600 was trading just above the flat-line in early deals as caution returned ahead of the Bank of England’s monetary policy decision. The central bank is widely expected to hike interest rate by 50 basis points for the first time in 27 years. In individual stocks, Lufthansa reported a smaller-than-expected quarterly loss, pushing shares of the German company more than 7% higher.
Elsewhere, the dollar is mostly lower on Thursday, with the USD index struggling below the 106.50 zone that capped recovery attempts earlier in the day. The greenback lacks demand amid recovery in risk appetite, with market focus shifting towards the US NFP employment report due on Friday. Stronger-than-expected data could push the buck north across the market ahead of the weekend, while in the immediate term, downside risks continue to persist.