World stocks shrug off slow­ing China growth

Kuwait Times - - BUSINESS -

LON­DON: Global stocks inched up to a new record high yes­ter­day, shrug­ging off weak­erthan-ex­pected Chi­nese trade data that clouded an oth­er­wise bright out­look for global growth. Wall Street was ex­pected to open flat to marginally lower, ac­cord­ing to in­dex fu­tures, af­ter slight falls on Euro­pean bourses and mod­est gains in Asia. Chi­nese im­ports and ex­ports both fell well short of fore­casts last month and growth in over­all trade, while still a healthy 8.8 per­cent, was its slow­est this year.

Trade in Ger­many, Europe’s pow­er­house econ­omy, slowed abruptly in June - an­other sign that de­mand may be start­ing to flag just as cen­tral banks con­tem­plate scal­ing back stim­u­lus. How­ever, MSCI’s all-coun­try world in­dex ticked up to set a new record high at 480.87 points. It was last up less than 0.1 per­cent at 480.83 points. The in­dex, which tracks shares in 46 coun­tries, is up for a 10th con­sec­u­tive month and is on track for its long­est monthly win­ning streak since 2003.

Shares across the globe have been hit­ting record highs in record low volatil­ity, sup­ported by a be­nign en­vi­ron­ment for global growth. Rat­ings agency Fitch this week lifted its out­look for the world econ­omy for this year and next. “Data con­tinue to sug­gest a syn­chro­nized global ex­pan­sion across both ad­vanced and emerg­ing mar­ket economies. Spill-overs from the re­bound in emerg­ing mar­ket de­mand are re­flected in the fastest growth in world trade since 2010,” said Fitch chief econ­o­mist Brian Coul­ton.

The pan-Euro­pean STOXX 600 in­dex was last down less than 0.2 per­cent, with min­ers among the losers as the Chi­nese data weighed on cop­per prices. MSCI’s broad­est in­dex of Asia-Pa­cific shares out­side Ja­pan proved rel­a­tively re­silient, inch­ing up 0.2 per­cent and back to­ward decade highs. South Korea dipped 0.2 per­cent, while Ja­pan’s Nikkei eased 0.3 per­cent and China’s main mar­kets edged up 0.1 per­cent. Hong Kong’s Hang Seng closed up 0.6 per­cent. In cur­rency mar­kets, the dol­lar dipped for a sec­ond con­sec­u­tive day af­ter ris­ing sharply on Fri­day fol­low­ing strongerthan-ex­pected U.S. jobs num­bers, which some an­a­lysts said bol­stered the case for the Fed­eral Re­serve to raise in­ter­est rates fur­ther. How­ever, many in mar­kets re­main un­per­suaded the Fed, hav­ing raised rates twice this year, will hike again in 2017.

St Louis Fed Pres­i­dent James Bullard said on Mon­day the cen­tral bank could leave rates where they are for now be­cause in­fla­tion was not likely to rise much. The dol­lar hit a 14-year high in early January in an­tic­i­pa­tion of US Pres­i­dent Don­ald Trump im­ple­ment­ing his pro-growth cam­paign pledges. Those ex­pec­ta­tions have faded. The dol­lar in­dex, which plumbed 15-month lows last week, was down 0.1 per­cent. The euro gained 0.2 per­cent to $1.1811 while the yen rose 0.4 per­cent to 110.34 to the dol­lar. Ster­ling was up 0.1 per­cent at $1.3045.

Ger­man 10-year gov­ern­ment bond yields, the bench­mark for bor­row­ing costs in the euro zone, held close to their low­est in more than a month at 0.46 per­cent, sup­ported by ex­pec­ta­tions that any with­drawal of Euro­pean Cen­tral Bank stim­u­lus would be grad­ual. This view was boosted on Mon­day by data show­ing in­dus­trial out­put in the euro zone’s big­gest econ­omy un­ex­pect­edly fell 1.1 per­cent in June from a month ear­lier.

Brent crude oil, the in­ter­na­tional bench­mark, dipped 11 cents to $52.26 a bar­rel. An in­dus­try source fa­mil­iar with the mat­ter told Reuters Saudi state oil com­pany Aramco will cut al­lo­ca­tions to its cus­tomers next month by at least 520,000 bar­rels a day. “Sup­port is com­ing from a sta­bi­liz­ing US rig count, fall­ing US in­ven­to­ries and the Saudi cut in ex­ports,” Ole Hansen, head of com­mod­ity strat­egy at Den­mark’s Saxo Bank, told the Reuters Global Oil Fo­rum. “But against this we still have ro­bust pro­duc­tion growth from the United States, Libya and Nige­ria.”

Cop­per fell 0.2 per­cent to just be­low $6,400 a tonne af­ter Chi­nese year-onyear im­ports of the metal fell. Gold rose 0.6 per­cent to $1,265 an ounce as the dol­lar weak­ened. —Reuters

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