LONDON: European stock markets were mostly higher on Monday as traders hoped for a pause in interest rate hikes by the European Central Bank after a further decline in eurozone inflation.
Asian equities closed with gains, tracing a pre-weekend bump on Wall Street, where investors cheered a further slowdown in US inflation that also stoked optimism the Federal Reserve would not have to raise rates further.
The gains were boosted by new pledges from China of measures to stimulate its stuttering economy.
A series of strong corporate earnings announcements, suggesting that higher rates have not taken an outsize toll on the economy, have also encouraged investors, with bellwethers Apple and Amazon set to release their latest earning reports on Thursday.
“The outlook for economic growth is front and centre for markets this week as we get a series of data releases which should have a major influence on central bank monetary policy,” said Laith Khalaf, head of investment analysis at AJ Bell.
“There are three data points on Tuesday, Thursday and Friday covering the health of the US jobs market, which has so far been solid as a rock despite rising interest rates making life harder for businesses.”
In the eurozone, official figures on Monday showed the economy grew 0.3 percent in the second quarter, while inflation eased to 5.3 percent in July from 5.5 percent the previous month.
That could bolster expectations for a pause in ECB rate hikes, after its chief Christine Lagarde said Sunday that “we are reaching our goal” of inflation at around two percent.
“We do expect a much lower reading in inflation by the end of the year,” said Bert Colijn, a senior economist at ING.
Inflation remains much higher in the UK, at nearly eight percent, putting the Bank of England on course to raise interest rates once more on Thursday.
In the United States, Wall Street charged higher Friday after data showed that the Fed’s preferred gauge of inflation fell last month to its slowest pace in two years.
US rates were again raised last week but the Fed said future decisions would be data-dependent, suggesting it might have come to the end of its tightening cycle as the world’s largest economy remains in rude health.
In China, the world’s second-largest economy, the government announced fresh measures to boost consumption, days after unveiling a number of initiatives for light industry.
The move comes as spending by China’s army of consumers remains subdued even after the lifting of strict Covid containment measures late last year.
A fresh round of figures showed the country’s manufacturing activity continued to shrink in July, albeit at a slightly slower pace than last month.
Hopes for a government drive to kickstart the economy have provided much-needed support to markets over the past week, even as some observers warn the large-scale measures seen in the past were unlikely.
Key figures around 1100 GMT
London - FTSE 100: FLAT at 7,691.50 points
Frankfurt - DAX: FLAT at 16,474.58
Paris - CAC 40: UP 0.5 percent at 7,511.90
EURO STOXX 50: UP 0.3 percent at 4,480.54
Tokyo - Nikkei 225: UP 1.3 percent at 33,172.22 (close)
Hong Kong - Hang Seng Index: UP 0.8 percent at 20,078.94 (close)
Shanghai - Composite: UP 0.5 percent at 3,291.04 (close)
New York - Dow: UP 0.5 percent at 35,459.29 (close)
Dollar/yen: UP at 142.32 yen from 141.17 yen on Friday
Euro/dollar: UP at $1.1039 from $1.1020
Pound/dollar: UP at $1.2865 from $1.2851
Euro/pound: UP at 85.81 from 85.72 pence
West Texas Intermediate: UP 1.0 percent at $81.36 per barrel
Brent North Sea crude: UP 0.3 percent at $85.13 per barrel
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