Shares rose on Wednesday after a Wall Street surge as investors grow more hopeful for the ongoing earnings season, while sentiment was also boosted by news that Russian gas flows to Europe would not be disrupted.
Markets also reacted positively to a report saying China will fine ride-sharing giant Didi $1 billion but end its year-long investigation, raising optimism a long-standing tech crackdown is nearing an end .
After falling sharply on Monday, all three of Wall Street’s main indices posted solid gains on Tuesday as corporate earnings eased concerns about the impact of rising inflation and interest rates on their bottom line.
Analysts said that many investors, who had priced in a weak earnings season, gave shares a boost by better than forecast readings.
While several companies — such as Apple and Johnson & Johnson — have indicated they have concerns about the outlook, there is a sense the sell-off could be bottoming across markets.
And some commentators have hinted that the second half could see a healthy rally.
“Stocks have been crushed,” said Kristina Hooper, a strategist at Invesco.
“That doesn’t mean we won’t see further downside for some stock markets around the world, especially given that earnings expectations are likely to be revised downwards. But I think we are much closer to the ground than to the top.”
A surge in tech giants helped the Nasdaq jump more than 3 percent, while the Dow and S&P 500 climbed more than 2 percent.
And the positive sentiment spilled over to Asia, where Hong Kong was among the top performers thanks to big strides by the city’s tech titans, including Alibaba and Tencent.
Traders there got a much-needed boost from a Wall Street Journal report that said Beijing is likely to fine Didi Global $1 billion before the curtain falls on a lengthy investigation.
The company will then be able to restart its core apps and add customers back, while also being allowed to resume its faltering Hong Kong listing.
The report was music to the ears of investors reeling from regulatory crackdowns on the tech industry and a range of other sectors, including private education. Hong Kong’s tech index rose more than two percent on Tuesday.
– Gas Aid for Europe –
Elsewhere, Tokyo, Shanghai, Sydney, Seoul, Singapore, Mumbai, Taipei, Bangkok, Jakarta and Wellington also rallied.
London rose as data showed that UK inflation hit a new 40-year high of 9.4 percent in June, putting further pressure on the Bank of England to raise borrowing costs.
Paris and Frankfurt also grew.
All eyes are now on Thursday’s monetary policy decision from the European Central Bank, where it is expected to announce its first rate hike in more than a decade to rein in rising inflation.
Officials have cut their jobs as they also must try not to drive a stake through the eurozone economy, which has also been battered by an energy crisis.
Talk of a half-point hike – instead of the quarter-point hike most had been expecting – has lifted the euro against the dollar after last week it fell to par for the first time in 20 years.
The currency was also supported by a Bloomberg News article that said Russia’s Gazprom would resume supplies through the Nord Stream 1 pipeline on Thursday, albeit at reduced capacity.
Moscow last week halted supplies to Germany for technical reasons, but there were fears it would keep the taps shut in retaliation for European sanctions over its invasion of Ukraine.
CMC Markets analyst Michael Hewson said: “If true, this is certainly welcome news considering that earlier in the day European Commission officials had assumed the pipeline would not be restarted. “
But he added: “They would probably be wise to proceed on that basis, given Moscow’s penchant for arming gas flows, as they have already done.”
While sentiment among traders is upbeat, observers remained cautious.
“Recession fears have certainly not gone away and last week’s rebound in equities may also reflect a rebound from oversold levels and extreme pessimism,” said Stephen Innes of SPI Asset Management.
– Key figures around 0720 GMT –
Tokyo – Nikkei 225: up 2.7 percent at 27,680.26 (close)
Hong Kong – Hang Seng Index: up 1.4 percent to 20,955.94
Shanghai – Composite: up 0.8 percent at 3,304.72 (close)
London – FTSE 100: up 0.4 percent to 7,326.68
Euro/dollar: rise to $1.0250 from $1.0226 on Monday
Pound/dollar: rise to $1.2012 from $1.2002
Euro/Pound: UP at 85.35p from 85.19p
Dollar/Yen: DOWN at 138.19 yen from 138.21 yen
West Texas Intermediate: FALSE, up 1.3 percent at $102.82 a barrel
North Sea Brent Crude: FALSE, up 1.3 percent at $105.92 a barrel
New York – Dow: up 2.4 percent at 31,827.05 (close)
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