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Posted by on Jul 2, 2014 in Laif Meidell

Japan, China boost U.S. stocks

Japan, China boost U.S. stocks

By Laif Meidell, CMT, president of American Wealth Management, and portfolio manager of the AdvisorShares Meidell Tactical Advantage ETF (MATH)

 
Good news from China and Japan helped kick off the second half of the year with its own kind of fireworks, propelling some U.S. indexes such as the Standard & Poor’s 500 to close at new highs on Tuesday.

U.S. stock futures were already moving higher before U.S. stock markets opened on Tuesday, in response to China’s better than expected Purchasing Manager’s Index for June, which came in at 51, a slight improvement over its May reading of 50.8. PMI measures the manufacturing activity of a country or region, so for a major economy such as China, showing an expansion in manufacturing growth means that other countries and industries will benefit as well.

China’s slightly rising PMI reading comes on the heels of recent improvements in retail sales, exports and industrial production reports. With growth momentum picking up, some economists believe that China’s latest efforts to turn around its sliding growth has put a floor under its economy for now.

Stocks also got a lift on Tuesday when the Bank of Japan released its tankan business survey, which indicated that large companies have raised their investment plans to 7.4 percent from 0.1 percent in March. This has been one of the complaints about large corporations since the financial crisis of 2008, namely that businesses were sitting on a large amount of cash instead of putting it to work. Hopefully, more companies around the globe are gaining confidence to invest more of their financial reserves, like we are currently seeing in Japan.

U.S. sectors have a slightly more bullish tone this week with technology and transportation sectors taking the lead. For the week, the Dow Jones U.S. Technology index gained 2.31 percent while the Dow Jones U.S. Transportation index rose 2.22 percent. For now, it appears that the world is hopeful that China and other parts of Asia can carry the global economic football forward. Let’s hope it lasts.

 

This commentary originally published in the Reno Gazette-Journal. Performance numbers used in this article were obtained through eSignal and are not guaranteed to be accurate.

The AlphaBaskets blog provides frequent market insight and commentary by AdvisorShares Investments, LLC, created by AdvisorShares and other leading active managers.  AdvisorShares Investments is an SEC-registered investment adviser and the investment adviser to the AdvisorShares actively managed ETFs. The views expressed on AlphaBaskets should not be taken as investment advice or a recommendation for any of the actively managed ETFs advised by AdvisorShares.

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