Spreadex Market Update
Good news from China and Japan lifts European indices to near 3-week highs
From China came a statement by the Ministry of Finance, affirming its commitment to accelerating ‘the implementation and improvement of proactive fiscal policy and related measures…to support stable growth and promote continued healthy economic development.’ This seemed to confirm the hopes of some kind of further Chinese stimulus, hopes that were ostensibly behind the large gains made by the Western markets on Tuesday.
Japan then more than did its part to make European investors giddy with excitement for the open, jumping a phenomenal 7.71% this morning, its largest one-day gain since the feral trading of the 2008 financial crisis. The reason behind such a giant leap was comments, likely inspired by the confirmation on Monday of Japan’s growth contraction, from Prime Minister Shinzo Abe that hinted at extra measures to stimulate the economy, including a swathe of market-pleasing corporate tax cuts.
Understandably given the recent, and price-eroding, lack of clarity coming from Asia, signs of firm, growth-supporting policies from China and Japan meant that, with traders back at school after a hectic summer, the European markets opened hell-bent on continuing to recover the losses of the past few weeks. The DAX and CAC were up over 2% at the start of the day whilst the FTSE jumped by more than 100 points, leaving the European indices nearing 3-week highs. The UK provides most of the news this Wednesday, with the FTSE receiving potential gifts in the form of manufacturing and industrial production figures, the trade balance number and the NIESR GDP estimate.
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