Global stocks continue to push higher, on hopes that policymakers are executing a "soft landing" in their battle against inflation.
After gains on Wall Street last night, shares across Asia have hit a one-month high today – as investors continue to move on from the volatility that gripped markets last week.
MSCI’s index of Asia-Pacific shares outside Japan hit a one-month high, before dipping back slightly, while Japan’s Nikkei has soared by 1.8%, or 674 points, up to 38,062.
The rally is being driven by expectations that the US Federal Reserve will start to cut its key policy rate next month, and that the US will dodge a recession.
Jerome Powell, the head of the US Federal Reserve, could cement those hopes – or shake them – when he speaks at a major economic symposium in the Rocky Mountains resort of Jackson Hole on Friday.
Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, said: "The week kicked off on a positive note on expectation that when Federal Reserve (Fed) chair Jerome Powell speaks at the Jackson Hole meeting on Friday, he will deliver a strong hint that the rate cuts will begin soon in the US.
"How soon? Probably in September? By how much? Probably a reasonable 25bp? Would the markets be upset with the idea of a 25bp cut instead of a 50bp? Probably not, because a 50bp cut would require a severe economic slowdown, a crisis or a panic mode, which is not good for risk appetite.
"Therefore, the best of both worlds would be the hint of a 25bp cut that would keep the market mood in the sweet soft-landing spot. And this is what investors hope to hear."
European stock markets have mostly opened higher, with the pan-European Stoxx 600 index gaining 0.3% in early trading.
Germany’s Dax and France’s Cac are 0.3% higher.
However, in London, the FTSE 100 has dipped by 14 points, or 0.15%. Shell and BP are among the fallers, tracking the decline in the oil price.
Brent crude, the international benchmark, has dropped 0.5% this morning to a near two-week low of $77.29 a barrel.
That adds to its $2-a-barrel fall on Monday, on hopes of success in the Middle Eastern peace talks.
China’s crude imports from top supplier Russia have fallen.
Official data shows that China imported 7.4% less oil in July than a year ago.
Russian oil arrivals, including via pipelines and shipments, totalled 1.76m barrels per day (bpd), according to data from the General Administration of Customs.
That is lower than the 1.9m bpd recorded in July 2023, as well as June’s 2.05m bpd.
That suggests weaker demand for energy in China, as its economy remains subdued – with export growth slowing and factory activity weakening.
This will also make a dent in Moscow’s revenues; Russia has redirected its oil exports from Europe to China, and India, after western countries imposed sanctions after its invasion of Ukraine.
The agenda
• 8.30am BST: Sweden’s Riksbank interest rate decision
• 9.30am BST: UK insolvency statistics for July
• 10am BST: eurozone inflation report for July (final reading)
• 1.30pm BST: Canadian inflation report for July
We’ll be tracking all the main events throughout the day ... |
