World shares have set up camp at one-year peaks as a rally in Chinese stocks helped offset news that Japan’s economic growth had ground to a halt last quarter, while oil prices extended their latest rally.
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In Hong Kong, the Hang Seng index added 0.7 per cent, to 22,930.74 points, while the Hong Kong China Enterprises Index gained 1.6 per cent, to 9,707.34.
The benchmark Nikkei 225 share index dropped 0.3% on concerns that Asia’s second-largest economy will continue to struggle.
In addition, the government’s latest data showed that household spending, another key gauge of current and future consumer confidence, had remained largely flat, adding pressure on the government following its recent upper house election pledges to convert its policies into bettering livelihoods and increasing living standards, with the same economic rhetoric largely unchanged since Prime Minister Shinzo Abe retook office three-and-a half-years ago on his “Abenomics” ticket. “The immediate impact from any further rate cuts, however, seems rather limited”. The Dow (DJI), S&P 500 (SPX) and Nasdaq (IXIC) recorded the best closing highs last week. The Pan-European STOXX 600 index (STOXX) went down on Friday bearing in mind that it was from a seven-week high.
The Head of investment strategy at AMP Capital Shane Oliver was quoted saying that after a long period, the shares are about to take a breather. Economists were predicting growth of 0.5%.
The same fundamentals should also underpin bonds.
Global stocks mostly rose Monday, despite subdued growth figures for Japan, as investors looked ahead to USA economic data this week as well as the minutes to the Federal Reserve’s last meeting. Capital expenditure declined by 0.4 percent indicating that uncertainty over the global economy and weak domestic demand combined to discourage firms from new investments.
U.S. retail sales growth was unexpectedly flat in July as consumers cut back on buying clothes and other goods, while the producer price index fell 0.4 per cent in July, the biggest drop in almost a year. Asian stocks have climbed 24 percent from their February low as lackluster data on the world’s biggest economies fuels speculation central banks will continue to support them with stimulus and loose monetary policy.
Investors have recently lengthened the odds on any Fed hike this year, with futures implying around a 46 percent chance of a move in December.
Weighing on the Japanese export industry, the yen currency appreciated against other major currencies since the start of the year. “Markets are generally bullish on all fronts”, a DBS commentary said of the USA week-to-come. One example is the Spanish yields (ES10YT=PR), which has experienced a fall of exceeding 60 basis points to break under under 1%.
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Brent crude futures were up 31 cents on Monday at $47.28 a barrel, while US crude added 35 cents to $44.84.
