China stocks hit 7-year high, Europe muted ahead of Fed

AP News
Posted: May 22, 2015 7:45 AM
China stocks hit 7-year high, Europe muted ahead of Fed

HONG KONG (AP) — Chinese stocks hit a seven-year high as investors pinned their hopes on further economic stimulus while most other world markets were subdued Friday ahead of a speech by Federal Reserve chair Janet Yellen.

KEEPING SCORE: European stocks were mixed in midday trading. France's CAC 40 was down 0.1 percent to 5,142.77 and Germany's DAX slipped 0.4 percent to 11,818.81. Britain's FTSE 100 rose 0.6 percent to 7,052.25. U.S. stocks were poised to open higher, with both the Dow and S&P 500 futures up 0.1 percent.

The big mover was the Shanghai Composite Index in mainland China, which earlier jumped 2.8 percent to close at 4,657.60, the highest level since 2008.

CHINA RALLY: Investors who weren't allocated shares in recent initial public offerings are plowing the money back into the market, sending it higher, said Andrew Sullivan, a sales trader at Haitong Securities. They're also betting that the economic stimulus that has powered the Chinese rally will continue after recent poor economic indicators such as a disappointing manufacturing index on Thursday. "Even when you've got bad news, stocks are going up anyway," Sullivan said. "It is just pure liquidity, it's not fundamental in any way.

US ECONOMY: Global investors are awaiting a speech later Friday by Fed Chair Yellen on the outlook for the world's biggest economy. Stock markets are hitting record highs as investors bet the U.S. central bank will delay raising interest rates based on mixed reports on the world's biggest economy. Data out Thursday showed U.S. home sales in April slipped on tight supply while jobless benefit applications fell to a 15-year low.

GOLDIN BOUNCE: A Chinese horse breeding, winemaking and financial conglomerate's Hong Kong-listed units saw further fluctuations a day after they plunged more than 40 percent. Goldin Properties Holdings Ltd. jumped 6.3 percent while Goldin Financial Holdings Ltd. rebounded before sinking 3.1 percent in the final half hour of trading. Earlier this week, another Chinese firm, solar panel maker Hanergy, tumbled in Hong Kong for no apparent reason before being suspended. The volatility is partly a sign of the rising flow of money from mainland China after the Hong Kong and Shanghai exchanges opened a trading link last year.

KEEPING SCORE: Asian benchmarks ended mostly higher. Japan's Nikkei 225 index added 0.3 percent to close at 20,264.41 and South Korea's Kospi rose 1.1 percent to 2,146.10. Hong Kong's Hang Seng advanced 1.7 percent to 27,992.83. Australia's S&P/ASX 200 was little changed at 5,660.70. Southeast Asian indexes were mixed.

ENERGY: Benchmark U.S. crude slipped 58 cents to $60.14 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.74 to close at $60.72 a barrel on Thursday.

CURRENCIES: The dollar declined to 120.98 yen from 121.05 yen on Thursday. The euro rose to $1.1176 from $1.1110.