WeChat mascots stand near Tencent’s offices in Guangzhou, China. Tencent shares hit their highest level in nearly two years ahead of first-quarter results due Wednesday.
Photo: bobby yip/ReutersGlobal stock indexes mostly rose, as investors continued to focus on the potential for a recovery in business activity in the months ahead, and to look beyond recent grim economic data.
Hong Kong’s Hang Seng Index traded 1.6% higher on Monday afternoon. Japan’s Nikkei 225 closed 1.1% higher while Australia’s benchmark S&P/ASX 200 gained 1.4%. Meanwhile, the Shanghai Composite declined slightly and South Korea’s Kospi Composite lost 0.5%
E-mini S&P 500 futures were little changed.
U.S. stocks continued to rally last Friday despite data showing that unemployment had climbed to a record high of 14.7% in April. For the week, the S&P 500 gained 3.5%, while the Dow Jones Industrial Average rose 2.6% and the Nasdaq Composite added 6%. All three indexes have rallied more than 30% from their March 23 lows.
“Everyone is just looking forward to the next quarter and looking ahead to 2021,” rather than the sudden stop caused by coronavirus lockdowns, said Kelvin Tay, regional chief investment officer at UBS Global Wealth Management in Singapore.
Mr. Tay said that while markets were likely to remain reasonably volatile, they were unlikely to drop substantially, given money managers had low holdings of stocks and high cash positions by historical standards. “This means the market is not crowded,” he said.
Mr. Tay said he likes shares of Chinese companies, saying comparatively there was clarity on China’s economic recovery, and it seemed well-placed to control a second wave of new coronavirus infections, should that occur.
In addition, he said the country’s technology companies were benefiting from shifts such as more demand for digital connectivity for the workplace as well as online shopping. He said those factors helped explain why Chinese stocks, as measured by gauges such as the MSCI China index, which includes both onshore and offshore stocks, were performing strongly this year.
On Monday, Chinese game and social-media giant Tencent Holdings Ltd. jumped more than 2%, hitting highest level in nearly two years ahead of first-quarter results due Wednesday.
However, U.S.-China tensions have ratcheted up again in recent days. President Trump on Friday said he hasn’t decided whether to cancel the January trade deal between the two countries. “I’m having a very hard time with China,” he said after a teleconference Friday between top Chinese and American officials.
While the heightened tensions may hurt sentiment on China, Mr. Tay said domestically oriented stocks that are not trade-sensitive, such as banks and insurers, would be more resilient.
The yield on the 10-year U.S. Treasury note rose to 0.692% after settling at 0.679% Friday. Bond yields rise as prices fall. Brent crude, the global oil benchmark, fell 1.2% to $30.62 a barrel.
Write to Chong Koh Ping at chong.kohping@wsj.com
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