Global shares rise after slew of robust earnings; oil falls as COVID restrictions stoke demand concerns
- Global shares rose on Monday after a slew of major companies reported strong second quarter earnings.
- Oil fell as COVID restrictions threatened to slow economic recovery, raising concerns about energy demand.
- Investors are awaiting key economic data that will offer more insight into the strength of the post-pandemic recovery.
Global shares rose on Monday after a series of heavyweight companies reported robust second-quarter earnings, indicating the economy continues to rebound from the pandemic.
US futures were last up as of 5:37 am E.T. Dow Jones futures gained 0.56%, S&P 500 futures rose by 0.64% and Nasdaq futures climbed 0.57%.
Quarterly earnings have largely beaten expectations, reflecting continued economic recovery and calming investor fears of a slowdown in growth. Europe's largest bank, HSBC, and beverage maker Heineken posted strong results early on Monday, buoying investor optimism.
Investors also looked ahead towards the releases of US manufacturing and services data, unemployment and non-farm payroll data throughout the week.
"In the US, the Federal Reserve is balancing a tightrope between maintaining a cautiously optimistic outlook on the US economy against a labour market which while improving is showing little sign of recovering the levels of labour participation that we saw pre-pandemic," Michael Hewson, chief market analyst at CMC Markets, said.
Additionally, the Biden administration's bipartisan infrastructure bill could make significant progress this week.
The yield on the US 10-year Treasury note was last at 1.235%, almost unchanged on the day.
Oil dipped on Monday as new and extended COVID restrictions including lockdowns linked to rising delta variant cases weighed on demand expectations and economic recovery in key Asian markets including China.
"The release of poorer-than-expected China NBS manufacturing PMI figures weighed on energy prices, as the world's second-largest economy is struggling to maintain growth momentum amid viral resurgence," Margaret Yang, strategist for Daily FX said. "Tighter travel restrictions and social-distancing measures point to softer fuel demand in the months to come, limiting the upside for oil prices," she added.
Brent crude oil was last 1.07% down, trading at $74.60 per barrel, while WTI crude had dipped by 1.2% to $73.06 per barrel.
Asian markets notched gains on Monday despite tougher restrictions across the region. Hong Kong's Hang Seng index closed 0.93% higher, while Tokyo's Nikkei 225 climbed 1.82% by the end of the trading day and the Shanghai Composite rose by 0.93%.
European markets started the day higher, following the lead of Asian equity markets. Frankfurt's DAX was last up 0.29%, the Euro Stoxx 50 was up 0.7% and London's FTSE 100 had risen 0.98%.
A series of readings of European manufacturing activity offered a mixed picture across the region, with the UK factory sector growing in line with expectations, while Germany beat forecasts and France saw a modest slowing in activity.