The stocks markets showed little movement on Thursday as investors eagerly anticipated key central bank meetings while grappling with concerns over China’s property market and disappointing earnings from Netflix and Tesla, which weighed on Wall Street futures.
Asia and commodities markets saw pockets of gains following China‘s government announcement of additional support for its economy. However, China’s tech stocks and the ongoing property concerns dampened overall sentiment.
On the other hand, European shares nudged higher, propelled by a surge in metals prices and a 2.3% leap in wheat prices after Russia’s attack on Ukraine’s ports, leading to a notable rise in mining and basic resource buffer stocks.
Crucial Next Moves by Major Economy Central Banks
Investor focus is centered on upcoming central bank meetings in Japan, Europe, and the United States, with the Bank of England set to meet in the first week of August.
Bank of Japan Governor Kazuo Ueda quelled speculation of a policy change by stating that there was still some distance to sustainably achieving the central bank’s 2% inflation target.
Traders and analysts anticipate a 25 basis point rate hike from the European Central Bank next week. Still, uncertainty looms regarding the central bank’s future actions due to a recent dovish tone taken by policymakers.
Meanwhile, traders seem more certain about the Federal Reserve’s next steps, with expectations of a 25 basis point hike, but no more.
Prime Stocks: China’s Property Crisis Reignites Concerns
China’s stocks have faced pressure in recent weeks as soft economic data dampened sentiment. The occurence left investors eager for meaningful stimulus to drive the country’s post-pandemic recovery.
Daleep Singh, chief global economist at PGIM Fixed Income, highlighted that China’s current recovery differs from previous ones as it heavily relies on consumer-led growth following years of credit-fueled investment in property and infrastructure.
Analysts at TD Securities anticipate Beijing to announce a 4 trillion yuan ($560 billion) stimulus package at July’s Politburo meeting to bolster the economy.
Mixed Outlook for Global Demand and Oil Prices
The stocks among oil prices inched higher on Thursday as a lower-than-expected drop in U.S. crude inventories and a weaker demand outlook influenced cautious investor sentiment.
September Brent futures climbed slightly, while August U.S. West Texas Intermediate (WTI) crude also saw a minor gain.
China’s demand for oil has surged year-on-year by nearly half in June, though hot stock levels rose to near an all-time high. Despite this, China has been pragmatically purchasing discounted Russian crude.
The Organization of the Petroleum Exporting Countries and the International Energy Agency expect China’s demand to continue rising, making it the primary driver of global growth.
Citi analysts noted that crude prices might struggle to find a clear direction in the coming weeks due to a mixed global demand outlook, with stronger gasoline and jet fuel demand but weaker petrochemicals and diesel consumption.
Brent crude prices recently broke through to a higher range after being stuck between $72 and $78 in May and June. Saudi output cuts and geopolitical risks supported the incident.
