(Bloomberg) — A shift in China’s monetary stance provided a welcome boost to markets at the start of a week that would be dominated by political unrest from the Middle East to South Korea and France, as well as major interest rate decisions. central banks.
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China’s top leaders have said they will embrace a “moderately loose” strategy next year, in a sign of greater easing likely to be welcomed by investors hungry for more stimulus. All eyes are now on the Central Economic Work Conference that starts on Wednesday, amid signs of more budget support. An index of Asian shares advanced, while Hong Kong’s benchmark rose 2.8%. The offshore yuan erased losses and traded 0.1% stronger.
“The Politburo’s somewhat looser monetary policy is welcome news, although it will not materially change the situation for the Chinese economy,” said Joachim Klement, head of strategy, economics and ESG at Panmure Liberum. “What is needed is substantially more fiscal stimulus, supported by looser monetary policy.”
Europe’s Stoxx 600 benchmark is on track for an eighth straight day of gains, its longest streak since May, as investors prepare for another interest rate cut by the European Central Bank. U.S. stock futures edged higher. Interest rates on government bonds and the dollar remained stable.
ECB policymakers will set interest rates in Frankfurt this week for the first time since the governments in Paris and Berlin due to budget talks. In addition to the ECB, the Bank of Canada and the Swiss National Bank are also expected to ease policy, while the Australian central bank is likely to leave its key interest rate unchanged, amid indications that the country’s economy is starting to weaken.
Crude oil rose after the overthrow of President Bashar al-Assad’s regime disrupted the already troubled Middle East. Investors are also bracing for the European Central Bank’s interest rate decision and key US inflation figures. Political uncertainties remain at the forefront, with Korea at risk of a prolonged political deadlock and Assad’s demise creating a power vacuum in the Middle East.
Korean markets extended their decline after opposition lawmakers said they would push for another impeachment vote against President Yoon Suk Yeol after he survived the first. Yoon was banned from leaving the country, Yonhap News reported. The won fell about 1% against the dollar.
In China, data shows that consumer inflation in the country has eased over the past month, showing that government efforts have not been enough to stimulate demand. Yields on Chinese corporate bonds are in their longest decline ever, reflecting the push for further easing.
“I think there is still a lot of expectation that more will be done next year,” Joey Chew, head of Asia FX Research at HSBC Holdings Plc, told Bloomberg TV. “The Economic Work Conference this week may not be able to provide the concrete numbers, but I think as long as the rhetoric suggests there will probably be more to come,” investors will be looking forward to it, Chew added.
READ: Assad’s fall in Syria sets the world on edge for more chaos in the Middle East
In the US, Wednesday’s consumer price data will give Federal Reserve policymakers a final look at the inflation environment ahead of their final meeting this year.
“We think the ECB will continue its successive 25 basis point cuts, but will also finally soften the tone of its communications,” Barclays Plc analysts led by Christian Keller wrote in a note. The British lender also sees a 25 basis point rate cut by the Fed in December.
Main events this week:
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Mexico CPI, Monday
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Tariff decision Australia, Tuesday
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Germany CPI, Tuesday
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CPI Brazil, Tuesday
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Japanese PPI, Wednesday
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Chinese leaders expect to hold the annual Central Economic Work Conference from Wednesday to December 12
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RBA Deputy Governor Andrew Hauser speaks on Wednesday
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US CPI, Wednesday
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Tariff decision Canada, Wednesday
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Brazil interest rate decision, Wednesday
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Australian unemployment, Thursday
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India CPI, Thursday
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ECB interest rate decision in the eurozone on Thursday
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Tariff decision Switzerland, Thursday
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France CPI, Friday
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Industrial production in the eurozone, Friday
Some of the major moves in the markets:
Stocks
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The Stoxx Europe 600 rose 0.3% as of 8:34 a.m. London time
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Futures on the S&P 500 were little changed
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Nasdaq 100 futures rose 0.1%
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Futures on the Dow Jones Industrial Average were little changed
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The MSCI Asia Pacific Index rose 0.3%
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The MSCI Emerging Markets Index rose 0.5%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0559
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The Japanese yen fell 0.3% to 150.49 per dollar
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The offshore yuan was little changed at 7.2839 per dollar
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The British pound rose 0.1% to $1.2757
Cryptocurrencies
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Bitcoin fell 0.9% to $99,143.51
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Ether fell 2.7% to $3,885.12
Bonds
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The yield on 10-year government bonds was little changed at 4.16%
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The German ten-year yield remained little changed at 2.11%
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The British ten-year yield remained little changed at 4.27%
Raw materials
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Brent crude rose 1.3% to $72.04 per barrel
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Spot gold rose 0.5% to $2,646.88 an ounce
This story was produced with the help of Bloomberg Automation.
—With help from Michael Msika and Catherine Bosley.
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