Global stocks rise even as China's manufacturing slows

Monday, August 2, 2021 | Annabelle Liang, Associated Press

A woman walks past a bank's electronic board showing the Hong Kong share index at Hong Kong Stock Exchange in Hong Kong Monday, Aug. 2, 2021. Asian stocks have started the week higher, even as China reported a slowdown in manufacturing activity and countries in the region continue to be hammered by the delta variant. (AP Photo/Vincent Yu)

SINGAPORE (AP) — Global stocks started the week higher Monday, even as China reported a slowdown in manufacturing activity and countries continued to be hammered by the delta variant.

Investors were spurred by encouraging earnings on Wall Street, which recently wrapped up another strong month. The S&P 500 notched six straight months of gains ending July.

France’s CAC 40 added 1% in early trading to 6,677.27 while Germany’s DAX gained 0.4% to 15,606.27. Britain’s FTSE 100 rose 0.9% to 7,096.59.

U.S. shares were set for a positive opening, with S&P 500 futures advancing 0.6% to 4,414.75. Dow futures climbed 0.5% to 35,007.

A notable 89% of companies on the S&P 500 have beaten earnings expectations, but it is unclear if the market upswing will persist, Yeap Jun Rong of IG said.

“Guidance from several big tech companies is pointing to slower growth ahead and markets may need to find another catalyst to drive further upside,” he added.

The moves follow a buoyant Asian session, where Tokyo's Nikkei 225 jumped 1.8% to close at 27,781.02. The Kospi in Seoul rose 0.7% to 3,223.04, while the Hang Seng in Hong Kong climbed 1.1% to 26,235.80.

The Shanghai Composite index added 2% to 3,464.29 and Australia’s S&P/ASX 200 was up 1.3% at 7,491.40. Benchmarks mostly rose across the region.

The gains in China follow data released Saturday by the National Bureau of Statistics showing the country’s official purchasing managers’ index fell to 50.4 in July from 50.9 in June. Numbers above 50 indicate expansion on the 100-point scale.

On Monday, a monthly manufacturing survey issued by a business magazine, Caixin, put July’s reading at 50.3. That was down from June’s 51.3.

The official figure was the lowest since February 2020, when a lockdown to prevent the spread of the coronavirus was in place. Analysts had expected a smaller easing of manufacturing activity.

China is also dealing with an outbreak of the delta variant of the coronavirus, which has already been running rampant in many other Asian nations.

Traders are also watching a crackdown by Beijing on Chinese tech companies, even as authorities moved to soothe fears.

Games and social media giant Tencent Holding Ltd. fell 0.8% in Hong Kong on Monday. However, internet search giant Baidu Inc. was up 2.2% and e-commerce giant Alibaba Group gained 1.5%.

Hong Kong, Shanghai and Shenzhen indexes eased in early trade, before “abruptly reversing course” as foreign investors pumped almost a billion dollars in markets, Jeffrey Halley of Oanda said in a report.

“That has seen a stunning reversal as regulatory risk has been forgotten,” Halley added.

In other trading, U.S. benchmark crude oil lost 65 cents to $73.30 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude oil declined 62 cents to $74.79.

The U.S. dollar rose to 109.65 Japanese yen from 109.62 yen on Friday. The euro advanced to $1.1888 from $1.1875.

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