Stocks Gain on Chinese Stimulus Bets, Gold Climbs: Markets Wrap

(Bloomberg) — Equity markets kicked off the week on a positive note as traders looked to more easing to buoy the global economy amid expectations that China may ramp up efforts to revive growth. Gold touched a record high.

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European and US stock futures rose and the MSCI Asia Pacific Index climbed, with shares in China, Hong Kong and South Korea all advancing. China announced plans for a rare economic briefing Tuesday by three top financial regulators just as it cut one of its short-term policy rates, fueling speculation that fresh stimulus is on the way.

Traders are looking for a new round of measures to resuscitate China’s economy after a slew of disappointing data in August raised concerns that the country could miss its annual expansion target of around 5% without additional support. Looking ahead, US statistics due later this week are likely to provide investors fresh insight about the pace and scope of further Federal Reserve easing.

“The start of the Fed easing cycle should lead to more stimulus from China, particularly as the 5% growth target seems difficult to achieve,” Mohit Kumar, chief strategist and economist for Europe at Jefferies International Ltd., wrote in a note. In addition to lifting Asian share markets, the “stimulus measures should also be beneficial for Europe.”

The euro was little changed after Olaf Scholz’s Social Democrats held off the far-right Alternative for Germany and looked set to cling on to power in the eastern state of Brandenburg. Meanwhile, French Prime Minister Michel Barnier said his new government could increase taxes for big business and the wealthiest as it seeks to repair runaway budget deficits.

In the UK, Chancellor of the Exchequer Rachel Reeves is expected to give a more “positive, optimistic message” about the future of the economy at the Labour Party’s annual conference, Environment Secretary Steve Reed told Bloomberg Radio. This comes after the government was criticized for dragging down confidence with gloomy warnings about the October budget.

The yen dropped after Bank of Japan Governor Kazuo Ueda indicated Friday that authorities aren’t in a hurry to raise interest rates again. Cash trading of US Treasuries was closed in Asia due to a holiday in Japan while a gauge of the dollar was little changed.

Elsewhere this week, the central banks of Sweden and Switzerland are scheduled to hold monetary policy decisions while a swath of Fed speakers — including regional presidents Raphael Bostic and Austan Goolsbee — are due to speak. The Fed’s preferred price metric and data on US personal spending and income are also set to be released.

Fed Governor Christopher Waller said on Friday he’d likely back quarter-point cuts at each of the next two central bank policy meetings in November and December.

“What markets will probably be looking for here is a very fine balance in the data — where disinflation continues unfettered whereas jobs don’t deteriorate too sharply,” Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd., told Bloomberg TV.

Oil climbed — after its biggest weekly gain since April — on signs China will step up support for its economy and on fears the conflict between Israel and Hezbollah could morph into a regional war. Worsening strife in the Middle East may spur more price gains in gold due to its haven status.

Meanwhile, the US Commerce Department is said to be planning to reveal proposed rules that would ban Chinese- and Russian-made hardware and software for connected vehicles as soon as Monday.

Key events this week:

Malaysia CPI, Monday
Eurozone HCOB Manufacturing PMI, HCOB Services PMI, Monday
UK S&P Global Manufacturing PMI, S&P Global Services PMI, Monday
Australia rate decision, Tuesday
Japan Jibun Bank Manufacturing PMI, Services PMI, Tuesday
Mexico CPI, Tuesday
Bank of Canada Governor Tiff Macklem speaks, Tuesday
Australia CPI, Wednesday
China medium-term lending facility rate, Wednesday
Sweden rate decision, Wednesday
Switzerland rate decision, Thursday
ECB President Christine Lagarde speaks, Thursday
US jobless claims, durable goods, revised GDP, Thursday
Fed Chair Jerome Powell gives pre-recorded remarks to the 10th annual US Treasury Market Conference, Thursday
Mexico rate decision, Thursday
Japan Tokyo CPI, Friday
China industrial profits, Friday
Eurozone consumer confidence, Friday
US PCE, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.3% as of 2:36 p.m. Tokyo time
Nikkei 225 futures (OSE) rose 2%
Australia’s S&P/ASX 200 fell 0.6%
Hong Kong’s Hang Seng rose 0.3%
The Shanghai Composite rose 0.7%
Euro Stoxx 50 futures rose 0.4%

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.1165
The Japanese yen fell 0.2% to 144.18 per dollar
The offshore yuan was little changed at 7.0481 per dollar

Cryptocurrencies

Bitcoin rose 1% to $63,845.76
Ether rose 3.4% to $2,661.03

Bonds

Commodities

West Texas Intermediate crude rose 0.8% to $71.57 a barrel
Spot gold rose 0.3% to $2,628.46 an ounce

This story was produced with the assistance of Bloomberg Automation.