Markets Get a Boost from Chinese Equities

Market indexes finished up today, continuing an overall strong past couple weeks of regular trading sessions pocked with moments of temporary bearishness, like yesterday or a week ago Thursday. The Nasdaq managed to close at another new all-time high, up 1.44% to 10,492.50. The S&P 500 rose nearly 0.8% on the day to 3170. The Russell 2000 picked itself up from yesterday, as did the Dow — both up 0.7%.

Data points overall remain a bit scarce in our current situation — this changes next week when Q2 earnings season shifts into a new gear, including fresh reports from JPMorgan Chase JPM and Delta Air Lines DAL — but we did see a new read (“new,” though for the month of May) on Consumer Credit: -$18.2 billion was lower than the -$15.5 billion consensus, but much improved from the downwardly revised -$70.2 billion for April. This marks the lowest we’ve seen Consumer Credit since 2015, when credit hit a record-low of -$111.81 billion.

If there is a relatively under-reported bullish case for market activity of late, it may be considered to be the rebound in Chinese equities. We see a 5-year breakout in Chinese stocks, partly due to national banks putting as much as $100 billion in equity exposure in the world’s second-largest economy.

Might this be a play on China’s relative strength in bouncing back from the coronavirus pandemic? Certainly if any country had a head start on doing so, it would be China, where COVID-19 reportedly began. But if Chinese banks are indeed making a push into domestic stocks, this might go a long way in helping investors get onboard. The Mainland China ETF (iShares/MSCI) MCHI grew 4.3% on Tuesday alone, and 16.2% over the past month.

Tomorrow we get a new weekly tally of Initial Jobless Claims and Continuing Claims, where for 13 straight weeks we’ve seen initial claims numbers fall. That said, we’re still north of 1.4 million new claims each week going back to mid-March, which illustrates that — while the U.S. labor market has moved impressively from its deep lows a few months ago — we still have a lengthy road ahead until we’re back to shattering new employment levels.

Is the Market Rigged?

Computer-driven High-Frequency Traders (HFTs) manipulate the market thousands of times a day – and their gains come at the expense of human investors. Zacks has mounted a Counterstrike to take advantage of the best profit opportunities created by HFTs. Access to these recommendations must be limited; the doors close soon.

See Counterstrike Trades Now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
JPMorgan Chase Co. (JPM) : Free Stock Analysis Report
 
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
iShares MSCI China ETF (MCHI): ETF Research Reports
 
To read this article on Zacks.com click here.
 
Zacks Investment Research
 
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report