U.S. stock futures rose, while international markets were mixed, as investors continued to weigh the prospects for global economic recovery in the wake of the coronavirus pandemic.
S&P 500 futures were up 0.6%, suggesting U.S. stocks could open higher Wednesday. The pan-continental Stoxx Europe 600 dropped 0.4%. Markets in France, Germany and Switzerland were closed for a public holiday.
In Asia, Japan’s Nikkei 225 and Korea’s Kospi Composite rose 0.8% and 0.5% respectively. That put both on course for their fourth straight day of gains. Hong Kong’s Hang Seng was little changed, sliding less than 0.1%, while Australia’s S&P/ASX 200 rose 0.2%, reversing earlier losses. The Shanghai Composite declined 0.5%.
Foreign and institutional funds—detecting more signs that some economies are slowly returning to normal—have started reallocating investments back into Asia, and particularly China, said David Chao, global market strategist for Asia Pacific ex-Japan at Invesco.
Mr. Chao said valuations of Asia shares were lower than those of developed-market peers, adding to investor incentives to buy the region’s stocks.
“Equities are expensive in developed markets like the U.S., and they’re not yet out of the woods with the coronavirus,” he said.
However, he warned that escalating trade tensions between the U.S. and China, coupled with economic weakness in developed countries, could weigh on stock performances globally.
Mr. Chao said U.S. stocks could be volatile in the months ahead, as investors become less optimistic about a V-shaped recovery.
“It feels like the calm before the summer storm,” he added.
A couple of near-term catalysts could lift regional markets, said Ben Powell, BlackRock Investment Institute’s chief investment strategist for Asia Pacific. One would be data—such as exports from South Korea, Taiwan and other trade-reliant economies—that started to show a recovery in global economic activity.
New stimulus measures by governments and central banks could be another trigger. China could detail new government spending plans during national legislative meetings that start Friday, while in Japan, the central bank will meet Friday to discuss further aid to financial institutions.
In the energy markets, West Texas Intermediate futures, the main gauge for U.S. crude oil prices, declined less than 0.1% to $31.93 a barrel. Global benchmark Brent crude rose 0.3% to $34.76 a barrel.
The yield on the 10-year U.S. Treasury note fell to 0.699% from 0.711% Tuesday. Bond prices rise as yields fall.
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