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Stocks gain on hopes of central bank stimulus

Published 2019-09-09, 04:43 a/m
© Reuters.  GLOBAL MARKETS-Stocks gain on hopes of central bank stimulus
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* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Ritvik Carvalho

LONDON, Sept 9 (Reuters) - Global stock markets gained on Monday as investors pinned their hopes on stimulus that's expected from the world's central banks to support slowing growth.

European markets opened higher after data showed a surprise rise in German exports and on expectations of stimulus by the European Central Bank later this week. The pan-European STOXX 600 index .STOXX was up 0.1% by 0747 GMT. .EU

MSCI's All Country World Index .MIWD00000PUS , which tracks shares across 47 countries, was up 0.05%.

Germany's trade-sensitive DAX index .GDAXI rose 0.2% after data showed that seasonally adjusted exports rose 0.7% in July. A Reuters poll of economists had pointed to a drop of 0.5%.

The data were a positive surprise in largely gloomy readouts from major economies since Friday, which heightened expectations of stimulus from central banks.

On Friday, U.S. jobs growth slowed more than expected in August while data over the weekend from China showed the country's exports unexpectedly shrank as shipments to the U.S. slowed two countries have been locked in a trade dispute since early 2018, and investors fear escalating tariffs between them -- already curtailing growth -- might tip the global economy into recession as early as next year.

"If all the currently proposed tariffs are implemented, we foresee that growth in the first half of next year will slow toward the brink of a recession," said Mark Haefele, chief investment officer at UBS Global Wealth Management.

But the prospect of central-bank support kept risk sentiment alive and well. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.2% and E-mini futures for the S&P 500 index ESc1 up 0.15%.

On Friday, China's central bank cut reserve requirements for a seventh time since early 2018 to free funds for lending Federal Reserve Board Chairman Jerome Powell said the Fed would continue to "act as appropriate" to sustain U.S. economic expansion The European Central Bank is expected to cut rates this week currencies, euro fell to a five-day low but recovered ground by 0820 GMT to trade 0.1% higher at $1.1036. EUR=EBS

The dollar was 0.02% higher against a basket of currencies. .DXY It traded at 106.940 yen JPY= , off the one-month peak of 107.235 scaled late last week.

The Australian dollar AUD=D4 , sensitive to shifts in risk appetite, remained near a five-week peak of $0.6862 set on Friday.

The pound was little changed at $1.2287 GBP=D3 . Sterling has bounced from a three-year low set a week ago as the threat of Britain leaving the European Union without a deal on Oct. 31 seemed to diminish.

But political uncertainty remains, preventing the pound from gaining ground. British lawmakers will vote on Monday on whether to hold an early election.

In fixed income, longer-dated euro zone government bond yields ticked higher, with most yields up 3 to 4 basis points in early trade. DE30YT=RR FR30YT=RR NL30YT=RR IT50YT=RR .

Oil rose on expectations that Saudi Arabia, the world's largest oil exporter, will continue to support output cuts by OPEC and other producers to prop up prices under new Energy Minister Prince Abdulaziz bin Salman. O/R

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