Stocks in Europe are set to follow Asian peers higher following better-than-expected Chinese economic data and after the central bank took further measures to support the struggling economy.
(Bloomberg) — Stocks in Europe are set to follow Asian peers higher following better-than-expected Chinese economic data and after the central bank took further measures to support the struggling economy.
European equity futures rose 0.7% as Asian shares rallied after Chinese industrial production and retail sales data beat estimates, adding to evidence earlier stimulus measures are starting to have an effect. The Australian dollar and Chinese yuan both strengthened. The positive data also has the Bloomberg Commodity Index set to post its biggest weekly gain in two months.
The People’s Bank of China kept the interest rate on its one-year medium-term lending facility unchanged and added further cash into markets via a key policy loan for the 10th month to help loosen conditions, a day after it announced another cut to lenders’ reserve requirements.
“The improvement in industrial production and retail sales is encouraging,” said Frances Cheung, a rates strategist at Oversea-Chinese Banking Corp. in Singapore. “Recent economic data point to some stabilization in economic activities, which shall set a floor to CNY interest rates.”China’s policy strategy appears to be one that puts forward an orchestra of measures within a short period of time in order to achieve some amplified impact, she said.
The signs that China’s economy could be on the mend helped to drive gains in metals and oil. Steel-making staple iron ore rose to the highest since early April and industrial bellwether copper climbed for a third day. Brent crude climbed as much as 1% and was on the cusp of a third weekly gain.
An equity benchmark for the region rose as much as 1%, led higher by Australian shares as a jump in iron ore lifted the nation’s miners. US equity futures edged upwards, signaling an extension of Thursday’s gains following retail sales and producer prices data that beat estimates. US Treasury yields edged lower during Asian trading.
Arm Holdings Plc jumped 25% in its trading debut in New York, while Ford Motor Co. and General Motors Co. underperformed as workers at Detroit carmakers started striking after deadlines for new contracts lapsed. Traders also braced for Friday’s triple witching options event — which has the potential to trigger volume spikes and volatility.
In currencies, the dollar edged lower versus most major peers as the Bloomberg dollar index is set to snap eight weeks of gains. The yen underperformed after Bank of Japan officials saw a discrepancy between what Governor Kazuo Ueda said in a recent interview and how traders interpreted the remarks, according to people familiar with the matter.
The dollar is losing ground as “the better-than-expected China data certainly gives excuse for profit-taking as we head into the weekend before the FOMC decision,” said Fiona Lim, a senior analyst at Malayan Banking Bhd. in Singapore. While the euro and pound may head higher, “they are likely to maintain their respective bearish trends amid a weak growth outlook and thus we prefer to sell euro, sterling on rally,” she said.
Meanwhile, the yuan strengthened as China is said to have told some brokerage firms to reduce proprietary trading in the foreign-exchange market, marking another step by authorities to defend the beleaguered currency.
Read More: Atlanta Fed GDP Now Downshifts, Adds to Case for Soft Landing
Key events this week:
- US industrial production, University of Michigan consumer sentiment, Empire Manufacturing index, Friday
Some of the main moves in markets:
- S&P 500 futures rose 0.2% as of 6:52 a.m. London time. The S&P rose 0.8%
- Nasdaq 100 futures rose 0.2%. The Nasdaq 100 rose 0.8%
- Japan’s Topix rose 1.2%
- Australia’s S&P/ASX 200 rose 1.3%
- Hong Kong’s Hang Seng rose 1%
- The Shanghai Composite fell 0.4%
- Euro Stoxx 50 futures rose 0.7%
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was little changed at $1.0652
- The Japanese yen was little changed at 147.43 per dollar
- The offshore yuan rose 0.2% to 7.2737 per dollar
- The Australian dollar rose 0.4% to $0.6466
- The British pound rose 0.1% to $1.2425
- Bitcoin was little changed at $26,600.83
- Ether rose 0.2% to $1,631.29
- The yield on 10-year Treasuries declined two basis points to 4.27%
- Japan’s 10-year yield declined one basis point to 0.700%
- Australia’s 10-year yield declined three basis points to 4.09%
- West Texas Intermediate crude rose 0.8% to $90.84 a barrel
- Spot gold rose 0.3% to $1,915.86 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Andrew Janes.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.