By Gina Lee
Investing.com – Asia Pacific stocks were up on Tuesday morning ahead of trade data from China that could offer clues to the country’s recovery from COVID-19. Also on investors’ radars are U.S. inflation data and second-quarter earnings.
China’s Shanghai Composite was up 0.25% by 10:07 PM ET (2:07 AM GMT) and the Shenzhen Component jumped 2.14%. The Chinese trade data, including exports, imports and the trade balance, will be released later in the day. Further data, including the second-quarter GDP and industrial production figures, will be released on Thursday.
Investors were also calculating the impact of a slowing economic recovery in China, alongside the fresh COVID-19 outbreaks in several regions, on fuel demand.
Hong Kong’s Hang Seng Index rose 1.55%. Japan’s Nikkei 225 rose 0.83% and South Korea’s KOSPI gained 0.66%.
In Australia, the ASX 200 was up 0.46%. The possibility that a COVID-19 lockdown in Sydney could be extended capped gains for the Australian index, however. The National Australia Bank (NAB) Business Confidence Index also fell to 11 in June, below May’s 20 figure.
Meanwhile, auctions of three-year and 10-year U.S. Treasury notes helped steady yields. A sale of $58 billion of three-year notes fetched yields slightly higher than before the auction, while the sale of $38 billion of 10-year notes saw stronger demand.
With Bank of America (NYSE:BAC), BlackRock (NYSE:BLK), Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM) and Morgan Stanley (NYSE:MS) among the names kicking off the earnings season, expectations for a solid earnings season are supporting a rally in global shares.
Investors are also placing bets on when central banks will begin asset tapering as economic recovery from COVID-19 continues in some countries. However, they also remain concerned about inflation alongside the recent spread of COVID-19's Delta variant and declining vaccination rates.
They now await the U.S. consumer price index (CPI) for June, due later in the day, and the producer price index, due later in the week, to further gauge inflationary pressures.
U.S. Federal Reserve Chair Jerome Powell will also testify before the Senate Banking Committee on Wednesday and Thursday, where his comments will be closely monitored for any hints on the Fed’s asset tapering schedule.
“Wall Street is bracing for a volatile week as market participants are divided on a bevy of issues that include whether to bet on growth or cyclicals and if inflation acceleration intensifies,” Oanda senior market analyst Edward Moya said in a note.
“One thing that everyone agrees upon is that second-quarter earnings will be stellar,” the note added.
Also on the central bank front, a slew of policy decisions will be handed down throughout the week. The Reserve Bank of New Zealand’s decision is due Wednesday, with the Bank of Korea and Bank of Japan will hand down their decisions on Thursday and Friday respectively.
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