Global stocks rose on Monday after China announced measures to shore up its faltering markets, but Western markets remained cautious amid more economic data from Europe and the United States later in the week were expected, central bankers said are deciding on their next steps. .
Beijing announced on Sunday it would halve stamp d. on stock trading to boost the battered market, and then introduced measures to support housing construction. China’s securities regulator also approved the launch of 37 retail funds.
Global equities (.MIWD00000PUS) rose 0.3% in European trading. European stocks also rose, led by tech stocks and China-focused automakers. The pan-European equity index (.STOXX) rose 0.6%. The FTSE is closed for public holidays.
Chinese industrial earnings fell 6.7% in July, extending the decline for the seventh consecutive month this year.
Additionally, China Evergrande Group (3333.HK) lost up to 80% of its market value on Monday as sh ares trading resumed. This is an important move for the world’s most indebted wealth company looking to restructure its external debt.
According to the Hong Kong Stock Exchange, foreign investors continued to withdraw from Chinese stocks, paying 8 billion yuan ($1.1 billion) net.
The Chinese blue-chip stock index (.CSI300) and the Shanghai Composite (.SSEC) were higher.
“If all goes well, there is no need for stimulus,” says Florian Ailbo, head of macro at Lombard Odier Investment Managers.
Ielpo said the latest measures represented a change in the Chinese government and an attempt to tactically boost market sentiment, in contrast to the wholesale packages announced in previous years.
Attention will now turn to the official August PMI, released on Thursday, which is expected to remain in the red.
S&P 500 futures and Nasdaq futures were up 0.2% and 0.3%, respectively, suggesting benchmark indices could extend last week’s modest gains.
The market beat a somewhat dovish outlook from Federal Reserve Chair Jerome Powell, who reiterated his desire to hike rates again but vowed to exercise “caution”.
“The central bank’s outlook has now become 50 shades more hawkish. We know interest rates will stay above 5%, but the question is for how long and to what extent? said Ailbo from Lombard Odier.
The future implies an 80% chance of no change at the September 20th meeting, but a 58% chance of an increase by the end of the year.
Negative risk in the workplace
Much depends on the flow of US data, including this week’s ISM manufacturing survey, as well as reports on wages, core inflation and consumer spending.
Average employment forecasts r,ose by 170,000 jobs in August and the unemployment rate remained stable at 3.5%.
Analysts at JP Morgan warned that a strike in the Hollywood entertainment industry could slow down job growth, forecasting a rise of just 125k.
This week’s EU inflation numbers could be crucial in the European Central Bank’s (ECB) decision on a rate hike next month.
The market is divided on whether there will be another rate hike to 3.75%, with ECB President Christine Lagarde insisting on Friday that monetary policy should be tighter.
This was a common theme among Western central banks. Bank of England Deputy Governor Ben Broadbent said over the weekend that interest rates should remain high “for some time”.
Outsider Bank of Japan Governor Kazuo Uede on Friday stressed the need for monetary easing.
This divergence kept the yen under pressure and the dollar remained at 146.54 early Monday, close to Friday’s 10-month high of 146.64. The euro hit 158.27 yen, its highest level since October last year.
The dollar fell from a multi-week high of $104.16 against a basket of currencies.
US two-year bond yields were broadly unchanged after hitting record highs on Friday in early July.
Higher yields and a relatively strong dollar were a boon for gold, which idled at $1,914 an ounce.
Oil prices received some support from a storm in the Gulf of Mexico and support from China.
Brent crude was up 20 cents at $84.68 a barrel, while US crude was up 26 cents at $80.09 a barrel.
Reporting by Nell Mackenzie and Wayne Cole; Edited by Stephen Coates