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Stocks scale five-week highs on China's post-holiday surge

Stock MarketsOct 12, 2020 04:20AM ET
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© Reuters. A passersby wearing a protective face mask walks in front of a stock quotation board, amid the coronavirus disease (COVID-19) outbreak, in Tokyo

By Thyagaraju Adinarayan and Tom Westbrook

LONDON/SINGAPORE (Reuters) - Global stocks hit five-week highs on Monday led by China's post-holiday surge as investors bet on a steady recovery for the world's no. 2 economy, but worries about rising COVID-19 infections capped gains in Europe and the United States.

European countries were considering adding fresh travel curbs due to rising coronavirus, a contrast to Asia-Pacific countries including Singapore, Australia and Japan, where a gradual easing of some international travel restrictions was under way.

Still, U.S. and European markets were a tad higher as investors hoped for coronavirus aid in the United States, with the Trump administration on Sunday calling on Congress to pass a stripped-down relief bill.

European stocks and U.S. stock futures rose 0.2%. FTSE 100 and sterling meanwhile were wobbly ahead of a Brexit summit later in the week.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 1% to 2-1/2-year highs, buoyed by a 3% gain in Chinese blue chips and a 2.2% rise by Hong Kong's Hang Seng index.

China has returned from an eight-day Mid-Autumn festival with investors encouraged by a robust rebound in tourism and ebbing coronavirus cases.

"If capital is moving on relative growth rates, then China is looking quite attractive," said Chris Weston, head of research brokerage Pepperstone in Melbourne. Equities are cheap, yields advantageous and the outlook solid, he said.

"From a virus perspective as well, we're seeing concerns in Europe, while China is considered a quasi-safe haven."

Chinese stocks were also boosted by rising chances of Joe Biden's victory in the U.S. presidential election -- an administration seen less likely to incline toward tariffs and trade disputes.

Chinese blue chips have gained 17% this year, compared with an almost 8% gain by the S&P 500. Foreigners' buying of Chinese government bonds hit its fastest pace in more than two years last month.

"The economic fallout of COVID-19 has accelerated the relative decline of the U.S. as the world's economic engine," said ANZ chief economist Richard Yetsenga. "It is also increasing the centrality of Asia - and particularly, of China."

U.S. markets are also gearing up for the earnings season. Major Wall Street banks including JPMorgan (NYSE:JPM), Citi and Bank of America (NYSE:BAC) poised to report later this week.

YUAN WOBBLES

In currency markets, a 0.4% drop in the yuan dragged the China-sensitive Australian dollar lower and underpinned small but broad gains for the dollar against other majors. [FRX/]

The People's Bank of China has scrapped a requirement for banks to hold a reserve of yuan forward contracts, removing a guard against depreciation.

The yuan is up more than 7% since late May and had shot higher on Friday as investors wagered that a Joe Biden presidency would drive smoother Sino-U.S. relations. It last sat at 6.7115 per dollar in onshore trade. [CNY/]

"We continue to expect a stronger yuan on the back of our expectation of solid Chinese growth and favourable interest rate differentials between China and the U.S.," Goldman Sachs (NYSE:GS)' analysts said in a note, with a 12-month yuan forecast at 6.50.

The euro edged 0.1% lower to $1.1819 and the yen firmed to 105.54 per dollar. The kiwi dipped 0.1% with the softer yuan to sit at $0.6661.

In commodity markets, oil prices were back under pressure after the resolution of an oilworkers strike in Norway and the resumption of production after a storm in the Gulf of Mexico. [O/R]

Gold held steep Friday gains at $1,929 an ounce as investors stuck with bets that U.S. stimulus would eventually arrive and drive inflation to the benefit of bullion. [GOL/]

The U.S. bond market is closed on Monday for Columbus Day.

Stocks scale five-week highs on China's post-holiday surge
 

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Comments (20)
Kaveh Sun
Kaveh Sun Oct 12, 2020 2:33AM ET
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Shanghai index 2 years ago was 3500. It is close to 3400 now. 4 years ago, it was at 5500. And reuters claimed 2 years high. Only the 5c army beleive in reuters.
Kaveh Sun
Kaveh Sun Oct 12, 2020 2:24AM ET
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Another ******from Reuters. China a50 is half its peak. Hangseng is also half.
Steffen vdm
Steffen vdm Oct 12, 2020 1:54AM ET
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China is laughing as the world's no 1 economy is going down the drain. Might not like it but that's the reality
David David
David9 Oct 12, 2020 12:38AM ET
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I am going full force into China...that's where big money will be made...
Jeff Becker
Jeff Becker Oct 12, 2020 12:31AM ET
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Markets hitting all time high means Beijing is buying more stock to prop up markets.Life has not returned to normal there.
TL Chan
TL Chan Oct 12, 2020 12:28AM ET
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China is not the future! On earth, only one such thing as CCP, who would send virus to its biggest customers in order to manipulate its customers including Europe and South Asia. If this the future , it means the end of the world!
David David
David9 Oct 12, 2020 12:28AM ET
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Do you have proof? Please give us proof...so far scientists have not concluded the origin of virus. Most likely it started outside of China.
Ronald Warren
Ronald Warren Oct 12, 2020 12:28AM ET
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I've read three articles about two scientists from Wuhan who helped developed Covid 19. One was female and she's in hiding.
David David
David9 Oct 12, 2020 12:28AM ET
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We want real scientists not propaganda scientists....
John Thompson
John Thompson Oct 12, 2020 12:28AM ET
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Ronald trumpet u better read some more scifi articles your way off the mark so ebola sars 1 2 which are also all rna viruses were all developed in a lab give me break
Ronald Warren
Ronald Warren Oct 12, 2020 12:12AM ET
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China is riding high today. Will selloff tomorrow.
Jesse Mulliniks
Jesse Mulliniks Oct 12, 2020 12:04AM ET
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It’s just comical at this point
David David
David9 Oct 11, 2020 11:56PM ET
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I told you guys...China is the future for investments. This is where the money from investors will flow for the next decade as China raise to number one...
ron dffadsfasdf
ron dffadsfasdf Oct 11, 2020 11:28PM ET
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i hope those investors go bankrupt someday. these "hopes" is getting old.
Pratt Man
Pratt Man Oct 11, 2020 11:12PM ET
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absolutely no stimulus until the next president is sworn in. we all already got a tax cut and it should have tricked down so we're all doing fine out here.
jack hong
jack hong Oct 11, 2020 11:11PM ET
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When mainstream media starts pushing the idea that something no longer matters (e.g who wins the election, when the stimulus is passed etc.), it's usually time to be on high alert rather than letting your guard down.
George Pichurov
George Pichurov Oct 11, 2020 11:02PM ET
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stocks creep on optimism for further optimism.
Muza Favorites
Muza Favorites Oct 11, 2020 10:22PM ET
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Pelosi does not want another stimulus bec she thinks everybody is rich.
Bulls MakeMore
Bulls MakeMore Oct 11, 2020 10:22PM ET
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She doesn't want stimulus to attack Trump, she doesn't care about Americans
Prince Trade
PrinceTrade Oct 11, 2020 10:01PM ET
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Testing commeting.
Chris Scheer
Chris Scheer Oct 11, 2020 9:55PM ET
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I'm pretty sure Pelosi is the Anti-Christ.
Vaish Ramesh
Vaish Ramesh Oct 11, 2020 9:55PM ET
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it's the Republicans who don't wanna help the people in need. stop consuming fake news and wake up.
robert morris
XcaliberTrading Oct 11, 2020 9:53PM ET
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Lol. Biden...bwahahahaaaa! President? Bwahahahahaaahahahaa! I have to pee...I have to pee..
Robert DZ the patterns
Robert DZ the patterns Oct 11, 2020 8:53PM ET
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it's Sunday night, it's too early to say that, it can change till Monday morning
New Jazenevd
New Jazenevd Oct 11, 2020 8:50PM ET
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Market push higher is almost unstoppable because it is supported by all governments around the world creating new money daily in increasing amounts. The only thing that could stop it would be socialist victory in US elections next month, it means specifically dem sweep. Anything less than this, e.g. Reps keeping Senate means continuation of strong market. Chance for dem sweep is low and so Investors better bet on strong market ahead with gold/silver hedge in case socialism wins and market drops.
George Pichurov
George Pichurov Oct 11, 2020 8:50PM ET
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socialism already in place with the courtesy of FED.
Ronald Warren
Ronald Warren Oct 11, 2020 8:50PM ET
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You need to understand that Americans , teens through 40's have been indoctrinated into socialism. That's what they want. Free shelter and money. Video games. Facebook, Etc. Cyber life!!
Bear Bull
Bear Bull Oct 11, 2020 8:39PM ET
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How long this title is going to be around as “news”?
justin namon
justin namon Oct 11, 2020 8:39PM ET
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Been
Luu Hung
Luu Hung Oct 11, 2020 8:39PM ET
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Till dinosaur rebirth
 
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