Global stock rally on China data capped by flight from healthcare shares

NEW YORK (Reuters) – World stock markets pared earlier gains as a continued flight from healthcare shares dragged on Wall Street, overshadowing earlier upbeat economic data from China.

The S&P 500 flattened as the healthcare index dived 2.1% on continued fallout from concerns about potential changes to U.S. policy.

Mixed corporate results, including an earnings beat from Morgan Stanley and a revenue miss from International Business Machines Corp, also dampened conviction among investors, said Chad Morganlander, senior portfolio manager at Washington Crossing Advisors in Florham Park, New Jersey.

“There’s no great narrative today,” he said. “Everyone’s waiting for incoming data from earnings before they make additional moves.”

MSCI’s 47-country world index barely remained in positive territory, having earlier been buoyed by better-than-expected Chinese data showing the country’s economy grew 6.4% in the first quarter.

China’s industrial output surged 8.5 percent in March from a year earlier, the fastest pace since July 2014 and well above forecasts of a 5.9 percent increase. Retail sales also pleased, with a rise of 8.7 percent.

Allianz Global Investors strategist and portfolio manager Neil Dwane said the data had been good enough to allay fears that China’s economy was collapsing although the rest of the year remained in question.

“Beijing will now be in a wait and see mode to gauge whether it has done enough,” Dwane said, referring to stimulus efforts. “To be bullish (on stocks) from here you would have to believe in a pretty strong global recovery in the second half… We are a bit more ho-hum.”

The Dow Jones Industrial Average fell 2.96 points, or 0.01%, to 26,449.7, the S&P 500 lost 1.96 points, or 0.07%, to 2,905.1 and the Nasdaq Composite added 4.41 points, or 0.06%, to 8,004.63.

FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., April 9, 2019. REUTERS/Brendan McDermid

The pan-European STOXX 600 index rose 0.10%.

MSCI’s gauge of stocks across the globe gained 0.02%.

Benchmark 10-year notes last rose 2/32 in price to yield 2.5868%, from 2.594% late on Tuesday.

(Graphic: World stocks bounce $7.5 trillion since late December – tmsnrt.rs/2IoRV6P)

The positive China data earlier pushed up the Australian dollar, often a liquid proxy for China plays, as much as 0.4% against the dollar to a two-month high. The Australian dollar later pared those gains to trade little changed.

Against a basket of major currencies, the dollar weakened 0.1% to 96.96 but remained within the 95.00 to 97.70 range that has held for the past six months.

The euro edged up 0.2% to $1.1302, recovering from losses driven by a Reuters report that several European Central Bank policymakers think the bank’s economic projections are too optimistic.

Another currency on the move was the New Zealand dollar which sank 0.7% to $0.6716 after annual consumer price inflation came in well below expectations, at just 1.5 percent for the first quarter.

In commodity markets, the general improvement in risk sentiment saw spot gold slip to its lowest for the year so far. It was last down 0.1% at $1,274.4247 per ounce.

FILE PHOTO: The London Stock Exchange Group offices are seen in the City of London, Britain, December 29, 2017. REUTERS/Toby Melville

Oil prices edged lower, reversing course from earlier gains on Chinese economic data and a fall in U.S. crude stocks.

Brent crude futures fell 5 cents to $71.67 a barrel, a 0.1% loss. U.S. West Texas Intermediate (WTI) crude futures fell 10 cents to $63.95 a barrel, a 0.2% loss.

Reporting by April Joyner; Additional reporting by Marc Jones and Noah Browning in London and Karen Brettell and Stephanie Kelly in New York; Editing by Raissa Kasolowsky, Hugh Lawson, Toby Chopra and Diane Craft

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