Hong Kong – Stocks piled up on Wednesday after a surge on Wall Street as investors grew hopeful in the ongoing earnings season, while sentiment was also boosted by news that the Russian gas flows to Europe will not be interrupted.
Markets also reacted positively to a report that China will fine ride-hailing giant Didi $1 billion but end its year-long investigation, bolstering optimism that a long-running tech crackdown coming to an end.
After falling sharply on Monday, Wall Street’s three major indexes posted solid gains on Tuesday as corporate earnings eased concerns about the impact on their bottom lines of soaring inflation and rising rates. of interest.
Analysts said with many investors pricing in a weak reporting season, the above-expected readings gave stocks a boost.
While several companies – such as Apple and Johnson & Johnson – have indicated they are concerned about the outlook, there is a sense that selling in the markets could be bottoming out.
And some commentators have suggested the second half could see a healthy rally.
“Stocks have been dejected,” said Kristina Hooper, strategist at Invesco.
“That doesn’t mean we won’t see more declines for some equity markets around the world, especially since earnings expectations will likely be adjusted lower. But I believe we’re much closer to the bottom. than from above.
A surge in tech giants helped the Nasdaq jump more than 3% while the Dow Jones and S&P 500 soared more than 2%.
And the positive vibes trickled down to Asia, where Hong Kong was among the top performers thanks to big advances from the city’s tech titans including Alibaba and Tencent.
Traders there received a much-needed boost from a Wall Street Journal report that Beijing should fine Didi Global a billion dollars before lifting the curtain on a drawn-out investigation.
The company will then be able to restart its key applications and add customers again, while also being allowed to resume its stalled listing in Hong Kong.
The report was music to the ears of investors who have been battered by a regulatory crackdown on the tech industry and a range of other sectors, including private education. Hong Kong’s tech index rose more than 2% on Tuesday.
– Gas relief Europe –
Elsewhere, Tokyo, Shanghai, Sydney, Seoul, Singapore, Mumbai, Taipei, Bangkok, Jakarta and Wellington have also stepped up.
London rose as data showed UK inflation hit a new 40-year high of 9.4% in June, putting further pressure on the Bank of England to raise the costs of loan.
Paris and Frankfurt are also on the rise.
All eyes are now on the European Central Bank’s policy decision on Thursday, where it is set to announce its first rate hike in more than a decade as it seeks to rein in soaring inflation.
Officials have their work cut out for them, as they must also try not to disrupt the eurozone economy, which has also been hammered by an energy crisis.
Talk of a half-point hike – instead of the more widely expected quarter-point hike – sent the euro higher against the dollar, after falling to parity last week for the first time. in 20 years.
The currency was also helped by a Bloomberg News report indicating that Russia’s Gazprom would resume deliveries through the Nord Stream 1 gas pipeline on Thursday, albeit at reduced capacity.
Moscow halted deliveries to Germany for technical reasons last week, but it was feared it was turning off the taps in retaliation for European sanctions over its invasion of Ukraine.
CMC Markets analyst Michael Hewson said: “This is certainly good news if true, given that earlier today European Commission officials assumed the pipeline would not restart.”
But he added: “They would probably be wise to continue on this basis given Moscow’s predilection for weaponizing gas flows as they have done in the past.”
While the mood among traders is positive, observers remained cautious.
“Recession fears certainly haven’t gone away and the rebound in equities over the past week could just as well reflect a recovery from oversold levels and extreme levels of pessimism,” said Stephen Innes of SPI Asset Management.
– Key figures around 07:20 GMT –
Tokyo – Nikkei 225: UP 2.7% to 27,680.26 (closing)
Hong Kong – Hang Seng Index: UP 1.4% to 20,955.94
Shanghai – Composite: UP 0.8% to 3,304.72 (closing)
London – FTSE 100: UP 0.4% to 7,326.68
Euro/dollar: UP at $1.0250 vs. $1.0226 on Monday
Pound/dollar: UP to $1.2012 vs. $1.2002
Euro/pound: UP at 85.35 pence against 85.19 pence
Dollar/yen: FALL to 138.19 yen against 138.21 yen
West Texas Intermediate: 1.3% drop to $102.82 a barrel
North Sea Brent: 1.3% down to $105.92 a barrel
New York – Dow Jones: UP 2.4% to 31,827.05 (closing)