NEW YORK: Global stocks rallied on Tuesday, buoyed by reassurances of China’s economic growth and robust economic data in the United States (US), which helped alleviate concerns of a global recession. The positive sentiment prompted a retreat in haven currencies such as the dollar and yen, while oil prices also eased.
Investors found encouragement in a speech by China’s Premier Li Qiang, who expressed confidence that the country was on track to achieve its five-percent target for economic growth in 2023, as set by Beijing earlier this year. China, the world’s second-largest economy, continues to grapple with the challenges of a slow recovery following the Covid-19 lockdowns.
In a further positive development for China-US relations, reports emerged of Treasury Secretary Janet Yellen planning to hold a meeting with her Chinese counterpart next month. This follows Secretary of State Antony Blinken’s recent trip to China, where he engaged in discussions with his Chinese counterpart and President Xi Jinping. The possibility of a summit between President Xi and President Joe Biden has also been raised, signaling a potential improvement in bilateral relations.
Encouraging Economic Indicators Boost Investors’ Confidence
On the domestic front, several encouraging economic indicators contributed to investor optimism in the United States. Consumer confidence unexpectedly surged to an 18-month high in June, driven by a more optimistic outlook for family finances. Additionally, new home sales experienced a significant increase in May, reaching the highest rate in over a year.
Moreover, orders for big-ticket manufactured items, particularly transportation equipment, rose once again last month. These positive data points defied expectations amidst the Federal Reserve’s efforts to raise interest rates and curb inflation. While the data allayed concerns of a potential recession, it may also prompt the Fed to consider further rate hikes beyond their earlier projections.
The Federal Reserve recently maintained interest rates at their current levels to assess the impact of previous rate hikes, but signaled the likelihood of future increases. Investors are eagerly anticipating Federal Reserve Chairman Jerome Powell’s speech at an annual central bank forum in Portugal on Wednesday, as they seek further insights into the potential trajectory of interest rate adjustments.
