SYDNEY- Asian shares were seeking a modicum of stability on Monday as a run of stellar US corporate earnings put a floor under markets, though Beijing’s regulatory crackdown continued to reverberate amid disappointing economic news.
China’s woes were underlined by surveys showing factory activity slowing sharply in July amid rising costs and extreme weather.
In contrast, Europe’s economic recovery outpaced all expectations last quarter, while US consumers spent with abandon in June as coronavirus restrictions eased, a trend likely to ensure a strong payrolls report at the end of this week.
“Surging company profits in the US and lower bond yields are providing support, and in any case the rising trend in shares is likely to remain in place into next year as rising vaccination rates allow economic recovery to continue,” said Shane Oliver, chief investment strategist at AMP Capital.
About 89 percent of the nearly 300 recent US earnings reports have beaten analysts’ profit estimates. Earnings are now expected to have climbed 89.8 percent in the second quarter, versus forecasts of 65.4 percent at the start of July.
There was also the prospect of more fiscal stimulus ahead as US senators worked to finalize a sweeping $1 trillion infrastructure plan that could pass this week.
The optimism was apparent on Wall Street with S&P 500 futures rising 0.5 percent and Nasdaq futures 0.4 percent.
EUROSTOXX 50 futures added 0.3 percent, while FTSE futures gained 0.2 percent Asia has not fared so well, with China’s crackdown on the tech and education sectors hammering stocks, while the spread of the Delta variant of the coronavirus in the region hit growth.
