World Stock Watch

Global Markets Anticipate Gains Amidst Mixed Signals

As the week begins, European shares are poised to rebound, mirroring Friday’s positive trend on Wall Street. Despite a lackluster Asian session, investors are shrugging off China’s disappointing debt swap program. The Euro Stoxx 50 futures have risen 0.5%, while US peers have also edged up.

China’s Economic Outlook Remains Uncertain

Beijing’s 10 trillion yuan program to address local governments’ debt risk has failed to impress investors, who were hoping for more robust fiscal stimulus measures. The Chinese CSI 300 benchmark initially fell 1.4% before recovering to close with modest gains. Foreign direct investment continues to slump, and anemic inflation has added to concerns about the world’s second-largest economy.

Experts Weigh In on China’s Volatility

Ecaterina Bigos, chief investment officer for Asia excluding Japan at AXA Investment Managers, expects increased volatility in Chinese equities. While policy announcements have boosted sentiment, the fundamental picture remains unchanged, with earnings yet to reflect any significant improvements.

Commodities and Currencies

Oil prices have stabilized after an initial decline, driven by concerns about China’s soft outlook. Iron ore has fallen towards $100 a ton. The dollar and euro remain steady, while the yen has slipped following a Bank of Japan meeting that hinted at caution on raising interest rates.

Bitcoin Surges to New Heights

The cryptocurrency has broken through the $81,000 mark, driven by incoming President Donald Trump’s support for digital assets and the election of pro-crypto lawmakers. Smaller cryptocurrencies have also rallied.

Central Banks in Focus

Federal Reserve Bank of Minneapolis President Neel Kashkari has indicated that the central bank may ease rates less than expected due to a strong US economy. This week, traders will be watching data from Australian jobs to Chinese retail sales, as well as inflation readings from the US and Eurozone. A slew of Federal Reserve officials are scheduled to speak, which may provide insight into the central bank’s thinking following the election result.

Key Events This Week

• Japan current account and Denmark CPI (Monday)
• Norway CPI and UN climate change conference (Monday)
• Germany CPI and Fed speakers (Tuesday)
• Japan PPI and Eurozone industrial production (Wednesday)
• US CPI and Australia unemployment (Thursday)
• Eurozone GDP and US PPI (Thursday)
• Reserve Bank of Australia Governor Michele Bullock speaks (Thursday)
• Fed Chair Jerome Powell and ECB President Christine Lagarde speak (Thursday)
• BOE Governor Andrew Bailey speaks (Thursday)
• Japan GDP and industrial production (Friday)
• China retail sales and industrial production (Friday)
• UK GDP and industrial production (Friday)
• US retail sales and Alibaba earnings (Friday)