Chinese data spurs markets
European, emerging market stocks show big gains
STRONG data from China kept world shares near a record high yesterday, sent copper to a 4½ month peak and left emerging market stocks buyers cheering a near 5 percent gain in the last five days.
Figures from Beijing showed China’s economy grew at a faster-than-forecast 6.9 percent year-on-year in the second quarter, thanks to a pick-up in industrial output and domestic consumption and as investment remained strong.
Asia shares had hit a 2-year high overnight and Europe’s bourses rose early on as they looked to score their fourth session of unbroken gains.
The jump in copper and other industrial metals, as well as higher oil prices following the Chinese data, meant mining firms led the charge, though all sectors shuffled higher.
“The China data was very helpful,” said fund manager UBP’s macro and FX strategist Koon Chow.
“I think it had a particular resonance after Friday’s (weaker than expected) US CPI and retail sales data… so it is extending the Goldilocks environment,” he said referring to a not-too-hot, not-too-cold market climate.
That lacklustre US data meant the dollar was struggling to rise above a 10-month low in early European trading having watched commodity-based – and therefore China-linked – Australian and Canadian dollars jet higher overnight.
The Aussie dollar hit its highest level in more than two years before it pulled back to $0.7813, while the Canadian dollar touched a one-year high before it settled at around C$1.2659.
Britain’s sterling and the euro both eased against the dollar, having jumped on Friday as officials from both sides prepared for Brexit talks in Brussels. The euro was worth 87.52 pence.
UK Brexit Secretary David Davis, in the Belgian capital for talks with the EU’s chief negotiator Michel Barnier a month after a first meeting, said yesterday that having “made a good start” during their last encounter, “this week we’ll be getting into the real substance”.
Working groups will focus on three areas: citizens’ rights; the EU demand that Britain pays some €60 billion (R896bn) to cover ongoing EU budget commitments; and other loose ends, such as what happens to British goods in EU shops on Brexit day.
“It seems that the British government wants to (take) major steps towards the EU in the upcoming round of negotiations,” wrote Commerzbank analysts.
An investor is reflected in a window displaying a board showing stock prices at the Australian Securities Exchange in Sydney, Australia, yesterday, as the Australian dollar hit its highest level in more than two years.