A look at the day ahead in European and global markets from Kevin Buckland
China's post-Covid recovery is firmly on track, according to a barrage of data on Tuesday. The economy expanded 4.5% in the first quarter year-on-year, accelerating from the previous 2.9% reading and handily outstripping forecasts for 4% growth. Retail sales surged more than 10%, giving hope that hitherto flaccid domestic demand could also turn around.
But market reaction was fairly muted and the yuan was little changed. That's perhaps a sign traders are worrying this could be a one-off and are bracing for more subdued data for the rest of the year.
Tensions between Washington and Beijing continue to give investors pause.
U.S. law enforcement officials on Monday arrested two New York residents for allegedly operating a Chinese "secret police station" in Manhattan's Chinatown, part of a crackdown on Beijing's alleged targeting of U.S.-based dissidents.
Asia stocks were mostly weaker on Tuesday, with investors possibly fretting about the implications of further Fed tightening after strong manufacturing data boosted bets for a hike in May.
Investors are also unlikely to be buying aggressively ahead of upcoming bank earnings, keen to see if any have been affected by turmoil in the sector. Goldman Sachs (NYSE:GS) and Bank of America (NYSE:BAC) report later in the day while Morgan Stanley (NYSE:MS) is on Wednesday.
JPMorgan (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) have all beaten Wall Street forecasts but State Street (NYSE:STT) tumbled more than 9% overnight after fee income fell.
Japan equities, though, were on track for an eighth straight day of gains, feeding off a weakening yen and some buoyant domestic financial results.
The European stock open will be watched closely after the week started with a pullback from one-year highs, ending a five-day winning run.
Bank Indonesia is widely expected to leave its key rate unchanged for a third consecutive meeting in the coming hours, one of a growing number of central banks which are opting to watch how policy tightening so far plays out in the economy.
For the Reserve Bank of Australia, the decision to pause last month after 10 consecutive hikes was a close one, minutes of the meeting revealed, and a potential return to tightening is very much alive.
Key developments that could influence markets on Tuesday:
UK labour data
German ZEW survey
Goldman Sachs, BofA earnings