PARIS: Global stock markets rose Monday on positive sentiment on interest rates and Chinese stimulus measures.
Trading was still animated by Friday’s message from US Federal Reserve chief Jerome Powell that left the door open for further increases in interest rates and also the possibility they may have reached their peak at a 22-year high of 5.25-5.5 percent.
“Fed Chairman Jerome Powell’s speech last Friday had something for both hawks and doves, but market reaction continues to look positive early Monday,” economists from Charles Schwab wrote in a note.
European shares lose steam as Powell speech feeds rate concerns
“Powell’s comments seemed to ease investor concern that further rate hikes may be coming,” they added.
While inflation is coming down, a recent run of strong economic data – particularly on jobs – has been seen by markets as putting pressure on the Fed to keep hiking interest rates.
The Fed’s data-dependent approach makes inflation and jobs data out this week even more important before the Fed’s rate-setting meeting next month.
“If the data continues to show an ease in labour market tightness and price pressures, then the Fed is likely done with its tightening cycle,” said National Australia Bank’s Rodrigo Catril.
“If the data doesn’t play ball, then further tightening should be expected. Thus, upcoming key market data releases (inflation and labour market) are likely to set the tone for markets over coming months.”
Wall Street’s three main indices were all higher in late morning trading.
In Europe, the Paris CAC 40 index briefly rose above London’s blue-chip FTSE 100 for the first time since 2000, although trading was closed Monday in Britain due to a public holiday.
While the development is a further indication of the recent difficulties of the London Stock Exchange, analysts said it has no real significance given their different composition.
Asian markets mostly closed higher.
‘Positive signal’
Shanghai was boosted by China’s decision to slash the tax paid on stock trades for the first time since 2008 as authorities battle to support the world’s second-largest economy.
Officials also said they would slow the pace of new listings, which usually suck up market liquidity, following a series of pledges from the authorities that have failed to lift optimism.
Analysts at China International Capital Corp said the latest measures beat expectations.
“The increasing force of the policy tools will lift market confidence, amplifying the positive signal for the market,” they said.
But Stephen Innes at SPI Asset Management was more sceptical about their potential impact.
“While the emergence of more accommodative measures is encouraging, the reality remains that these interventions seem somewhat fragmented, particularly within the broader context of the substantial property market downturn,” he said.
The moves came as shares in troubled Chinese property giant Evergrande resumed trading in Hong Kong after a 17-month suspension for not publishing financial results.
They plunged more than 80 percent after it released its earnings Sunday showing losses of $4.53 billion in the first half of the year and just $556 million in cash assets.
Once China’s largest real estate firm, Evergrande defaulted in 2021 and is saddled with more than $300 billion in liabilities, becoming a symbol of a nationwide property crisis that many fear could spill over globally.
Investors were also keeping tabs on US Commerce Secretary Gina Raimondo’s talks with Chinese counterparts in the latest bid to ease trade tensions between the world’s two largest economies.
They agreed to set up a working group on bilateral trade and investment issues.
Key figures around 1530 GMT
New York - Dow: UP 0.5 percent at 34,526.47 points
Frankfurt - DAX: UP 1.0 percent at 15,792.61 (close)
Paris - CAC 40: UP 1.3 percent at 7,324.71 (close)
EURO STOXX 50: UP 1.3 percent at 4,291.07 (close)
London - FTSE 100: Closed for public holiday
Tokyo - Nikkei 225: UP 1.7 percent at 32,169.99 (close)
Hong Kong - Hang Seng Index: UP 1.0 percent at 18,130.74 (close)
Shanghai - Composite: UP 1.1 percent at 3,098.64 (close)
Euro/dollar: UP at $1.0805 from $1.0797 on Friday
Pound/dollar: UP at $1.2582 from $1.2578
Euro/pound: UP at 85.87 pence from 85.82 pence
Dollar/yen: UP at 146.61 yen from 146.44 yen
West Texas Intermediate: UP 0.5 percent at $80.22 per barrel
Brent North Sea crude: UP 0.2 percent at $84.68 per barrel
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