Equities slightly firmer as investors assess lower-than-expected growth target from China
The bear and bull statues outside the Frankfurt Stock Exchange. Picture: BLOOMBERG/ALEX KRAUS— World shares and bonds edged up on Monday as investors assessed a lower growth target from China than many had expected, with testimony from US Federal Reserve chair Jerome Powell and jobs data this week that could decide the pace of future rate hikes.
While Chinese stocks dropped, MSCI’s broadest index of Asia-Pacific shares outside Japan was still up 0.5% by 9.33am GMT, while Japan’s Nikkei touched a three-month high. “The announcement may disappoint some investors, but on the other hand, it could ease some fears of a strong inflationary impact from China,” Lomholt said.
San Francisco Fed president Mary Daly on Saturday reiterated rates may have to go up, but set a high bar for moving back to half-point increases. “Payrolls are due on the final day when Fed officials can publicly discuss monetary policy, but CPI [consumer price index] will be released during the blackout period,” he said. “If we end up in a situation where the jobs and inflation numbers present a conflicting view, the outcome of the Fed meeting could become even harder to predict.”
This week, Australia’s central bank is expected to lift its rates by 25 basis points on Tuesday, while the Bank of Canada is seen pausing having raised rates at a record pace of 425 basis points in 10 months.
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