Favorable progress in Asia has helped them lead the way this week in stocks. China & Japan’s recent rebounds were contrasted by slipping Treasury yields in the US. While investors hold their breath about the Fed’s potential monetary policy changes, political controversy is sweeping Europe. A series of nip & tuck presidential elections in the UK, Italy & Germany are wreaking havoc on European stocks. The pound also took a loss, while commodities joined the slide. These new developments showcase why investors remain hesitant even though global growth is on track.
Asian Stocks Enjoy Banner Week
Rising Shanghai stocks are highlighting growing potential in Asia. Chinese manufacturing data blew investors away when they exceeded estimates. At the end of the day the Shanghai Composite Index enjoyed a 0.5% increase. This epic rally took place after a two-day holiday in China. The manufacturing purchasing managers index managed to retain 51.2 in May. This second straight month of progress emboldened investors who previously predicted it would only reach 51 in a Bloomberg survey.
Hong Kong’s Hang Seng is also on the rise after enjoying its 5th consecutive month of gains. The Hang Seng China Enterprises Index added 0.5%, putting it on track for another record month. These comebacks show that the world’s second largest economy hasn’t lost its first-quarter momentum.
Not to be outdone by China, data from Japan highlighted their current industrial output rebound. Surging overseas demand is helping the country pull off an economic hail-Mary. While the outlook looks bright for Japan’s future, they still experienced minor setbacks. Japan’s Topix slipped 0.2%, which miraculously pared a 0.4% loss. The yen also took a slight hit with a 0.3% loss. This put it at 111.13 per dollar, which was a surprise twist since the currency rose 0.4% on Tuesday.
U.S. stocks are cautiously edging higher as tensions between America & Germany reached new highs. The S&P 500 Index rose by 0.1%, while the benchmark index slipped 0.1%. While that index experienced mixed results, the Nasdaq 100 Index is on track for an all-time high. Its 8th straight day of advances helped ease fears as Fed policy makers unveiled two more rate hikes for 2017. The dollar also stayed steady as the Bloomberg Dollar Spot Index rose by 0.2%.
Even though these sectors enjoyed positive news, Europe continues to be embroiled in controversy. Worrying presidential elections in the UK, Italy & Germany are once again causing investors to think twice. A recent poll showed that euro-area economic confidence is fluttering. This growing skepticism led to the 4th day of declines for the Stoxx Europe 600 Index. The pound was hit the hardest with a 0.3% slide, which put the sterling at $1.2820.
Commodities also experienced a rough week with both crude & precious metals reporting weak figures. Oil was hit with back to back losses after losing 0.5%. This sent the price down to $49.31 per barrel. These losses were allegedly created by OPEC’s failed conciliation with Russia to extend output limits. While crude stalled, gold extended a 0.4% loss. The precious metal fell an additional 0.2%, leaving it at $1,260.42 an ounce.
These conflicting reports may be troubling to some, but they showcase the market’s resilience. Once again Europe is steeped in controversial elections, but this isn’t anything new after the political upsets of 2016. As the pieces to this fragile union start to break, the world’s super powers are still unfazed as they prepare to steal the spotlight. Investors may be treading carefully, but the market remains in an advantageous position.