Global stocks mostly pushed higher on Monday as investors remained optimistic interest rates won’t go higher and China made moves to boost lacklustre growth.
European stock markets were boosted by data showing the economy grew in the second quarter and inflation slowed in July, raising hopes the European Central Bank will indeed be able to hold off from hiking interest rates.
Asian equities closed with gains, tracing a pre-weekend bump on Wall Street and bolstered by new pledges from China of measures to stimulate its stuttering economy.
On Wall Street, the Dow opened flat and the S&P 500 and Nasdaq edged higher at the open of another busy week for company earnings reports and data.
A series of strong corporate earnings announcements, suggesting that higher rates have not taken an outsized toll on the economy, have also encouraged investors, with bellwethers Apple and Amazon set to release their latest earnings on Thursday.
“The outlook for economic growth is front and centre for markets this week as we get a series of data releases which should have a major influence on central bank monetary policy,” said Laith Khalaf, head of investment analysis at AJ Bell.
“There are three data points on Tuesday, Thursday and Friday covering the health of the US jobs market, which has so far been solid as a rock despite rising interest rates making life harder for businesses.”
In the eurozone, official figures on Monday showed the economy grew 0.3 percent in the second quarter, while inflation eased to 5.3 percent in July from 5.5 percent the previous month.
That could support expectations for a pause in ECB rate hikes, after its chief Christine Lagarde said Sunday “we are reaching our goal” of inflation at around two percent.
“We do expect a much lower reading in inflation by the end of the year,” said Bert Colijn, a senior economist at ING.
Inflation remains much higher in the UK, at nearly eight percent, putting the Bank of England on course to raise interest rates once more on Thursday.
In the United States, Wall Street charged higher Friday after data showed that the Fed’s preferred gauge of inflation fell last month to its slowest pace in two years, stoking optimism the Federal Reserve would not have to raise rates further.
US rates were again raised last week but the Fed said future decisions would be data-dependent, suggesting it might have come to the end of the tightening cycle as the world’s largest economy remains in rude health.
In China, the world’s second-largest economy, the government announced fresh measures to boost consumption, days after unveiling a number of initiatives for light industry.
The move comes as spending by China’s army of consumers remains subdued even after the lifting of strict Covid containment measures late last year.
A fresh round of figures showed the country’s manufacturing activity continued to shrink in July, albeit at a slightly slower pace than last month.
Hopes for a government drive to kickstart the economy have provided much-needed support to markets over the past week, even as some observers warn the large-scale measures seen in the past were unlikely.
Key figures around 1330 GMT
New York – Dow: FLAT at 35,457.97 points
London – FTSE 100: UP 0.2 percent at 7,711.39
Frankfurt – DAX: UP 0.2 percent at 16,502.42
Paris – CAC 40: UP 0.5 percent at 7,511.06
EURO STOXX 50: UP 0.4 percent at 4,482.54
Tokyo – Nikkei 225: UP 1.3 percent at 33,172.22 (close)
Hong Kong – Hang Seng Index: UP 0.8 percent at 20,078.94 (close)
Shanghai – Composite: UP 0.5 percent at 3,291.04 (close)
Dollar/yen: UP at 142.53 yen from 141.17 yen on Friday
Euro/dollar: UP at $1.1026 from $1.1020
Pound/dollar: DOWN at $1.2835 from $1.2851
Euro/pound: UP at 85.88 from 85.72 pence
West Texas Intermediate: UP 1.1 percent at $81.46 per barrel
Brent North Sea crude: UP 0.8 percent at $85.67 per barrel
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