Breaking News
0

Italy relief, China stimulus hopes lift global stocks

Stock MarketsOct 22, 2018 05:25AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. The German share price index DAX graph at the stock exchange in Frankfurt

By Karin Strohecker

LONDON (Reuters) - European shares gained on Monday amid relief over Italy's budget, following rallies in Asia after China promised to provide stimulus to stabilize its economy and offset the impact of U.S. tariffs.

Promises of tax cuts and coordinated official statements of support for stock markets in the world's second-largest economy saw Chinese shares stage their biggest one-day surge in three years. Shanghai blue chips jumped around 4.5 percent, adding to Friday's bounce on Beijing's pledge of support for the economy and companies.

Japan's Nikkei rose 0.4 percent. Markets elsewhere in Asia also enjoyed healthy gains..

European stocks opened higher after Moody's kept Italy's sovereign rating stable on Friday instead of cutting it to negative. The decision fueled a rally in Italian government bonds and boosted shares in the country's banks.

"Moody's opens the door for a euro bounce, while Chinese verbal support for the economy and markets has given us a risk-friendly mood to start the week," Societe Generale (PA:SOGN) said in a note to clients.

The mood looked to spill over into U.S. markets, where E-Mini futures for the S&P 500 were 0.4 percent higher while Nasdaq's added 0.7 percent.

This week is the peak period of the U.S. earnings season, with Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT) and Caterpillar (NYSE:CAT) among the companies reporting.

Helped by a strong economy and deep corporate tax cuts, S&P 500 earnings per share are expected to grow 22 percent in the third quarter, according to I/B/E/S data from Refinitiv.

"The season on an absolute basis will likely wind up being 'strong' and the vast majority of companies will exceed consensus expectations," said analysts at JPMorgan (NYSE:JPM) in a note.

"However, headwinds are building at the margin in the form of U.S. dollar strength, supply chain disruptions owing to all the trade uncertainty, and rising costs. Even the mere hint of a turn in profit fundamentals would have severe ramifications."

The outlook for global growth in 2019 has dimmed for the first time, according to Reuters polls of economists, who cautioned that the U.S.-China trade war and tightening financial conditions would trigger the next downturn.

ITALIAN RELIEF

On currency markets, the euro sailed higher against the dollar after the Moody's report. It also benefited from comments by Italian Deputy Prime Minister Luigi Di Maio, who reiterated the country does not intend to leave the single currency.

Bond yields dropped across the curve, with 10-year yields enjoying their biggest one-day drop since the June.

But later in the day, Italy must explain to the European Commission its breach of rules. It faces the rejection of its budget, possibly leading to sanctions.

The government expects the commission to decide on Tuesday to ask a member state to revise its draft budget, for the first time ever, a government source said on Sunday.

Italy is also expected to be on the agenda when the European Central Bank meets on Thursday. The bank is considered certain to keep policy on hold and is likely to put off discussion about its reinvestment policy until December.

The dollar weakened 0.1 percent against a basket of currencies at 95.578 [USD/] while sterling idled at $1.3081 as the market waited for more developments on Brexit.

Prime Minister Theresa May will tell parliament that 95 percent of Britain's divorce deal has now been settled. But she will repeat her opposition to the EU's proposal for the land border with Northern Ireland and many see the risk of a leadership challenge being mounted.

Saudi Arabia also remained in the spotlight after Riyadh called the killing of journalist Jamal Khashoggi a "huge and grave mistake" but sought to shield its powerful crown prince from the crisis.

U.S. President Donald Trump and European leaders are pushing Saudi Arabia for more answers.

In commodity markets, Brent crude futures climbed past op $80 per barrel, with U.S. sanctions against Iran's crude exports due to be implemented next month. [O/N]

Gold prices edged higher toward the 2 1/2-month peak hit last week.

(Graphic: Asia-Pacific valuations - https://tmsnrt.rs/2Dr2BQA)

(Graphic: MSCI, Shanghai Indexes - https://tmsnrt.rs/2OGOOuu)

(The story is refiled to remove superfluous letter from headline.)

Italy relief, China stimulus hopes lift global stocks
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email