European equities extended their gains in morning trade on Tuesday as investor sentiment was boosted by stronger Chinese economic data and hopes that the banking crisis is passing.
In Europe, the region-wide Stoxx 600, Germany’s Dax and France’s Cac 40 all rose 0.6 per cent.
US futures were tipped to make gains at the open, with contracts tracking the blue-chip S&P 500 up 0.4 per cent and tech-heavy Nasdaq expected to rise 0.7 per cent.
China’s gross domestic product rose 4.5 per cent year on year in the first quarter, well above analysts’ expectations of a 4 per cent rise, as the world’s second-largest economy began to recover after easing its longstanding zero-Covid policy.
“The data out of China has given a boost to risky assets like stocks, commodities and US futures,” said Neil Shearing, group chief economist at Capital Economics. “There is a sense that the global economy is doing better and is riding out effects of [the] SVB crisis, but whether or not that continues remains to be seen.”
The CSI 300 index of Shanghai- and Shenzhen-listed shares erased earlier losses to close up 0.3 per cent. In Hong Kong, the Hang Seng index was down 0.6 per cent.
Lisheng Wang, China economist at Goldman Sachs, said the growth outperformance suggested “a very strong post-reopening recovery.”
In Europe and the US, investors continued to look for signs of slowing inflation and economic activity, which may point to central banks nearing the end of their rate-raising cycles.
The swaps market indicates a near two-in-three chance that the European Central Bank will choose a 0.25 percentage point rise. Prices also indicate the US Federal Reserve will opt for a 0.25 percentage point increase over no change.
The yield on US two-year government bonds, which are more sensitive to interest rate changes, was down 0.02 percentage points to 4.1 per cent.
In recent days, the US has seen mixed earnings results for several major banks. On Monday, the KBW Bank index added 1.4 per cent, despite a 9.2 per cent decline in State Street shares after quarterly profits missed expectations. Bank of America, Morgan Stanley and Wells Fargo gained 2.9 per cent, 3 per cent and 4.2 per cent respectively.
The dollar index, which measures the greenback against six other currencies, fell 0.4 per cent, while the euro and sterling both fell 0.4 per cent against the dollar.
Brent crude and West Texas Intermediate, the US equivalent, rose 0.3 and 0.4 per cent respectively.
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