Good news from China could surge materials share


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Good news from China could surge materials share

Although a lift up of investors’ optimism over the prospects of Sino-US trade deal had been fading away, an upbeat market sentiment surrounding China’s economy might flesh up shares of materials companies. Shares of S&P 500’s industrials and technologies, heavily plummeted last year as a result of a spurring tit-for-tat retaliatory tariff war amid a slowing global demand, had been highly responsive to the progress of US-China trade talks and it had posted an all-time-high last week alongside Nasdaq composite.

Besides, the S&P 500 index had gained 30 percent so far this year, after surging as much as 40 percent last week before witnessing a fall following the release of a much softer US economic data. Materials’ stock price had not been as sensitive as industrials, yet they would likely to receive a boost up, as a robust Chinese economy had started to increase global consumption alongside industrial outputs.

Apart from that, on March, China industrials had unveiled a 13.9 percent growth after contracting for four straight months in a row, which would likely to increase demands for the materials shares. Concomitantly, addressing to an aggressive Chinese spending on financial stimulus such as low-cost long term debts for small- and medium-scale businesses, to rekindle its slowing economy, a chief global market strategist at Investo in New York, Kristina Hooper said, “What we’re seeing is China spending more on stimulus: fiscal stimulus and monetary stimulus,” while expressing optimism over global growth outlook on upbeat Chinese industrial data, a portfolio manager for alpha strategist at Loomis Sayles in Boston, Andreas Dicenso said, “It all goes back to the global growth outlook. With the front run in hard data, we’re beginning to see a pretty significant rally”.