Stocks Jump as China Plans Tax Cut; Pound Edges Up: Markets Wrap

Stocks rallied across Europe and Asia and US futures jumped on signs China is stepping up efforts to combat an economic slowdown. The pound edged up as UK politicians prepared for a crunch vote on Brexit.

The Stoxx Europe 600 Index climbed for the fifth day from six, tracking a broad-based advance across Asia where Japan’s market reopened after a holiday. Shares in Hong Kong and Shanghai were among the biggest gainers after senior Chinese economic policy officials vowed tax cuts to boost growth, while lending data from the country suggested December estimates may be exceeded. The dollar was steady. Oil recouped some of Monday’s losses, trading above $51 a barrel in New York.

The potential stimulus in China and warm welcome it has received from markets reflects the delicate balance underpinning 2019’s risk asset rebound: The same weak macro data that prompted a sell-off at the end of last year has the potential to spur looser monetary policies and therefore ignite a rally. Plenty of risks remain, however, not least the ongoing US shutdown and the increasingly frantic countdown to Brexit.

Investors must also factor in corporate earnings as the results season gets underway. JPMorgan Chase & Co. and Wells Fargo will report on Tuesday.

Here are some important events coming up:

Some of the world’s biggest banks announce earnings, including JPMorgan, Bank of America, Wells Fargo, Morgan Stanley and Goldman Sachs. Alcoa, Indian IT company Mindtree, Netflix, Taiwan Semiconductor, American Express and BlackRock also post results.

These are the main moves in markets:

Stocks

Futures on the S&P 500 Index advanced 0.6% as of 8:05 a.m. London time, to the highest in more than a month on the largest gain in a week. The Stoxx Europe 600 Index advanced 0.8% to the highest in almost six weeks on the biggest gain in a week. The UK’s FTSE 100 Index advanced 0.7%, the largest gain in a week. Germany’s DAX Index climbed 1% to the highest in almost six weeks on the biggest increase in more than a week. The MSCI Asia Pacific Index jumped 1% to the highest in almost six weeks. The MSCI Emerging Market Index advanced 1.1% to the highest in six weeks.

Currencies

The Bloomberg Dollar Spot Index decreased less than 0.05%. The euro advanced less than 0.05% to $1.147. The British pound increased 0.1% to $1.2883, the strongest in two months. The Japanese yen decreased 0.5% to 108.67 per dollar, the weakest in a week on the biggest dip in more than a week.

Bonds

The yield on 10-year Treasuries increased one basis point to 2.71%. Germany’s 10-year yield fell less than one basis point to 0.23%, the lowest in a week. Britain’s 10-year yield gained one basis point to 1 305%, the highest in almost three weeks. The spread of Italy’s 10-year bonds over Germany’s decreased less than one basis point to 2.6091% points.

Commodities

West Texas Intermediate crude increased 1.4% to $51.20 a barrel. Gold fell 0.2% to $1 288.53 an ounce.

Source: moneyweb.co.za