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GLOBAL MARKETS-The bulls get back into China

Published 2020-09-15, 07:10 a/m
© Reuters.

* China economic data boosts markets, yuan at 16-month high

* Dollar in the doldrums, euro and EM FX on hot streaks

* Central bank meetings dominate week's agenda

* Oil up to $40 again, gold shines again

* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn

* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

*

By Marc Jones

LONDON, Sept 15 (Reuters) - World stocks rose on Tuesday on the back of upbeat Chinese data and optimism about coronavirus vaccines as a struggling dollar kept the hot streaks for the euro and some of the biggest emerging market currencies sizzling.

The euro's EUR= fifth day of gains made for a slow morning in continental Europe .EU but a solid 0.8% rise on London's internationally- skewed FTSE .FTSE maintained the overnight momentum from Asia and Wall Street. .N

The day's eye-catching move was a 16-month high for the yuan CNH= CNY= B9N2F802B as 5.6% jump in Chinese industrial output in August and the first pick-up in retail sales since the coronavirus outbreak gave it its best day since July. external demand, a further recovery from the pandemic and pent-up demand from the floods all contributed to the robust activity data in August," Ting Lu, chief China economist at Nomura, said in a note to clients.

"We expect a further, albeit gradual, recovery of the services sector, a steady improvement in retail sales and elevated fixed-asset investment growth."

With sentiment also boosted by hopes for a COVID-19 vaccine after British drugmaker AstraZeneca restarted its vaccine trial and the dollar extending recent losses, other currencies were also on the rise.

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The euro was up 0.2% at $1.1891 EUR= after a surprise jump too in Germany's ZEW sentiment survey the Australian and Kiwi dollars both gained as did Britain's pound GBP= as traders showed little reaction to the government winning the first parliamentary vote on its controversial new Brexit bill. /FRX

With the yuan CNH= leading the charge, MSCI's EM FX index also climbed to a near 7-month high. .MIEM00000CUS . EMRG/FRX

"It is better risk appetite and the softer dollar environment," ING's Chief EMEA FX and interest rate strategist, Petr Krpata, said, though the approaching U.S. election was likely to prevent too much of a run up, he added.

SUGA RUSH

Overnight, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS had added 0.5%, for a fourth straight day of gains that hoisted it up 3% for the year having recently reversed its coronavirus plunge.

E-Mini futures for the S&P 500 ESc1 put on 0.6%, also reversing early losses, while Europe's STOXX 600 .STOXX was last up 0.5% having shaken off its slow start thanks to the uplifting German ZEW readings. September ZEW was a strong beat, with expectations reaching a 20-year high and current conditions also exceeding expectations," Morgan Stanley (NYSE:MS) economist Markus Guetschow said, although he did caution most other data was still gloomier.

The yen JPY= nudged higher as Japanese Chief Cabinet Secretary Yoshihide Suga won a ruling party leadership vote, as expected, paving the way for Japan's first change of leader in nearly eight years. meanwhile, took profit on a three-day rally in Japan's stock market, pushing the Nikkei .N225 down 0.4%.

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"He's seen as someone who's particularly stock market friendly. The fact that we've got political certainty for the next two years from someone who's connected to the free market is going to be good news for Japan," said Jim McCafferty, joint head of Asia Pacific equity research at Nomura.

There is still plenty of action to come this week.

U.S. retail sales figures from August are due on Wednesday and the U.S. Federal Reserve starts a two-day policy meeting later, the first since unveiling a landmark shift to a more tolerant stance on inflation in August.

The Bank of Japan and the Bank of England are set to announce their respective policy decisions on Thursday too.

In commodity markets, most industrial metals were bolstered by the robust Chinese data. MET/L

Brent crude LCOc1 climbed back to $40 a barrel too O/R and gold prices XAU= put on 0.4%, extending a sharp rise in the previous session. GOL/

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Yuan gaining against dollar again

https://tmsnrt.rs/2GZegrX

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Additional Reporting by Anshuman Daga in Singapore; Editing by Ana Nicolaci da Costa)

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