Chinese officials have committed to stimulating the world’s second-largest economy, which is likely to cause the European stock markets to open modestly higher on Tuesday.
Relsted: European stocks rise as Powell’s speech dominates market sentiment By Peter Nurse:
At 02:05 ET (06:05 GMT), the DAX futures contract in Germany traded 0.1% higher, CAC 40 futures in France rose 0.2%, and the FTSE 100 futures contract in the U.K. increased 0.2%, following the U.K.’s Bank Holiday weekend.
China will take more steps to boost demand and keep prices and jobs stable in the second half of the year, the country’s finance ministry said on Tuesday. This is part of the government’s plan to boost slow growth.
Last week, China’s cabinet approved a new set of economic stimulus measures that included billions of dollars in policy funding. This led to these comments.
The news that Chinese leaders want to boost their country’s economy stands in stark contrast to the fact that most countries are tightening their money policies.
At last week’s Jackson Hole conference, Chairman of the Federal Reserve Jerome Powell adopted a hawkish stance, signalling that the U.S. central bank would not hesitate to limit lending to curb inflation, even at the outset of a recession.
Relsted: European stocks are mixed; keep an eye on Eurozone CPI.
A member of the ECB’s board of directors, Isabel Schnabel, echoed Powell’s comments over the weekend, saying that central banks must act quickly to fight rising inflation.
Schnabel stated, “Even if we enter a recession, we have little alternative but to continue along the road of normalization.” The impact on the economy would be substantially severe if inflation expectations became unanchored.
Because of this, investors will pay close attention to the numbers this week to see if they should be worried about a global recession.
Figures on consumer confidence in the Eurozone for August will be released later in the afternoon, but most people will be paying attention to Friday’s monthly U.S. employment report, and markets might not like a good result if it means interest rates will keep going up quickly.
Oil prices went down on Tuesday, wiping out some of the big gains from the previous session, as attention turned to an upcoming OPEC+ meeting and the possibility of supply cuts.
OPEC+, which stands for the Organization of Petroleum Exporting Countries, Russia, and their allies, will meet on September 5. Last week, Saudi Arabia brought up the idea of reducing output to stop oil prices from falling too much.
Relsted: U.K. inflation tops 10%; European stock futures increase.
By 02:05 E.T., U.S. oil futures were trading at $97.00 per barrel, while Brent crude futures declined 0.2% to $102.69 per barrel. Monday was the first day in more than a month in which both indices reported gains of over 4%.
In addition, gold futures declined 0.2% to $1,746.20/oz, and EUR/USD traded 0.1% higher at 1.0001.
