European stocks markets hit a new record high in early morning trading on Friday, fueled by momentum from a China-led rally in Asia.
At 05:13 Greek time (09:13 Greek time), the pan-European Stoxx 600 index had added 0.3% to 526.92. It had earlier hit an intra-session high of 526.51 points.
Germany’s DAX traded 0.6% higher, France’s CAC 40 rose 0.3% and the UK’s FTSE 100 climbed 0.3%.
More Chinese stimulus ahead, reports say
China’s central bank cut interest rates and pumped more liquidity into the domestic banking system on Friday as Beijing continues to push to shore up the country’s faltering economy and meet its target of around 5 percent growth this year.
The measures, which will come after a separate stimulus package was announced earlier this week, are expected to be announced ahead of a holiday week starting on October 1, Reuters reported. The news agency added that the meeting of China’s top Communist Party leaders underscored concerns about the health of the world’s second-largest economy.
Citing sources, Reuters reported that the cities of Shanghai and Shenzhen plan to lift key restrictions on the housing market in the coming weeks. Chinese officials are also considering a special issue of government bonds worth about 2 trillion yuan ($284.43 billion), Reuters reported.
If the reports are correct, the package could help China’s gross domestic product rise by about 0.4 percent over the next year, Capital Economics analysts said in a note to clients.
Hopes of increased stimulus pushed shares in China to their best week since 2008.
The measures also boosted luxury stocks in Europe, which derive much of their revenue from sales in China. Shares in high-end fashion groups such as LVMH, Kering ( EPA:PRTP ), Hermes, Hugo Boss and Burberry rose, while carmakers also gained.
Moncler shares received an additional boost after LVMH agreed to acquire up to a 22% stake in the investment vehicle that controls the Italian luxury clothing maker.
French and Spanish inflation fall – focus turns to US data
Inflation in both France and Spain fell more than expected in September, boosting expectations that the European Central Bank will cut interest rates again next month.
In France, annual consumer price growth fell to 1.2% from 1.8% in August, below economists’ forecasts of 1.6%. The corresponding rate in Spain also fell to 1.5% from 2.3%, slower than forecasts for 1.9%.
Investors will likely keep a close eye on new personal spending and inflation data from the US, which could provide insight into the state of the world’s largest economy as the Federal Reserve moves closer to more expected rate cuts later this year. The Fed cut borrowing costs by 50 basis points last week.
Personal spending, which accounts for more than two-thirds of economic activity, was estimated to have increased 0.3% in August, slowing from 0.5% the previous month.
Meanwhile, economists expect the personal consumption expenditures (PCE) price index, which is used by Fed officials as a gauge to monitor inflation, to rise 0.2% month-on-month in August, matching July’s pace. On an annual basis, the measure is expected to slow to 2.3% from 2.5%.
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Reference;
Kanowsky, S. (2024) European stocks touch record high amid China-powered rally By Investing.com, Investing.com. Investing.com. Available at: https://www.investing.com/news/stock-market-news/european-stocks-touch-record-high-amid-chinapowered-rally-3635521 (Accessed: 27 September 2024).
