US stocks rose in early trade on Monday, recovering from losses in the previous week, with Didi sharply higher following a report that Chinese regulators were set to conclude a probe into the ride-hailing app and restore its apps to mobile stores.
At 1510 BST, the Dow Jones Industrial Average was up 1.2%, the S&P 500 was 1.4% firmer and the Nasdaq was ahead 1.8%, with sentiment also boosted by a positive session in Asia as investors welcomed the end of further Covid restrictions in China.
In commodity markets, oil prices rose after Saudi Arabia decided to lift prices for its crude sales next month despite OPEC and allies agreeing last week to increase production more than planned. Brent crude pushed above $120 a barrel to its highest level in three months.
On the corporate front, Didi shares surged more than 50% following a Wall Street Journal report that China plans to conclude its cybersecurity probe and lift its ban on new users.
Victoria Scholar, head of investment at Interactive Investor, said: “The authorities are also looking at allowing Didi’s app back on domestic app stores this week. Last July, its app was removed after Chinese authorities opened a data-security probe for ‘national security reasons’.
“China’s regulatory crackdown really took its toll on Didi which posted a $4.7bn loss at the end of last year. A majority of shareholders voted in May for Didi to delist from the New York Stock Exchange. Whether this report means these plans are overturned is yet to be seen. However, it is clear that the prospect of Beijing loosening its grip on the tech company would be extremely welcomed by investors.”
Twitter stock slumped after Elon Musk threatened to abandon his $44bn takeover of the social network if it refuses to hand over data on spam and fake accounts. Tesla owner Musk said Twitter was “actively resisting and thwarting” his information rights under the merger agreement, and that this was “a clear material breach” of Twitter’s obligations.
Elsewhere, Spirit Airlines flew higher after JetBlue sweetened its takeover offer for the smaller rival.
On the macroeconomic front, all eyes will be on May inflation data due on Friday. CMC Markets analyst Michael Hewson said: “As we look ahead to this week’s US CPI numbers for May, the main worry for investors is that in their increasing urgency to contain upside risk in inflation, central banks tighten monetary policy too quickly and tip the global economy into recession.
“Putting to one side the fact that surging inflation is probably already doing that in terms of a cost-of-living squeeze on consumption patterns, markets appear to be navigating a tightrope of concern over which is the better option.
“It is becoming increasingly obvious from the tone of a number of Fed policymakers that a pause in the US rate hiking cycle appears unlikely at the moment. Last week we heard from Fed vice chair Lael Brainard, who is generally considered one of the more dovish voices on the FOMC, arguing that the case for a September pause was a hard one to make. This suggests little in the way of a consensus for a delay at this point.”
