- Asian and European equities and US futures jumped on Monday as traders bet on a surge of government stimulus and celebrated a better outlook for the US-China trade war.
- China announced reforms to interest rates, Germany indicated it could find $55 billion to combat recession, and US Fed Chair Jerome Powell could signal further cuts to interest rates in a speech later this week.
- "We are doing very well with China, and talking!" Donald Trump tweeted, raising hopes of a a resolution to the US-China war.
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Asian and European equities and US futures jumped on Monday as traders bet on a surge of government stimulus and celebrated a better outlook for the US-China trade war.
China announced new loans will largely be benchmarked against rates that banks charge their best customers, promising cheaper borrowing for both households and companies, according to Bloomberg. Germany indicated it could find $55 billion to combat recession, according to Reuters, after its economy shrunk last quarter. Jerome Powell, chair of the US Federal Reserve, might signal further cuts to interest rates this year in a speech later this week.
All three factors are "helping boost the mood on Monday," Jasper Lawler, head of research at London Capital Group, said in a morning note. "Growing expectation of stimulus measures from countries across the globe is going a long way to boost sentiment."
Meanwhile, Donald Trump eased fears of further escalation in the trade war between the world’s two largest economies. "We are doing very well with China, and talking!" the US president tweeted on Sunday. His economic director, Larry Kudlow, added there have been "positive" calls between the two sides, according to Bloomberg.
However, Trump warned any deal could be scuppered if the Chinese government resorts to violence to quell ongoing protests in Hong Kong. He also raised doubts over whether his administration will extend exemptions from the ban on US companies trading with Chinese tech titan Huawei for another 90 days.
Here’s the market roundup as of 10:20 a.m. (5:20 a.m. EST):
- Asian stocks rose with China’s Shanghai Composite up 2.1%, Japan’s Nikkei up 0.7%, and Hong Kong’s Hang Seng up 2.2%.
- European equities climbed with Britain’s FTSE 100 up 0.7%, Germany’s DAX up 0.8%, and the Euro Stoxx 50 up 0.7%.
- US stocks are poised for a positive open. Futures underlying the Dow Jones Industrial Average and S&P 500 rose 0.8%, while Nasdaq futures rose 0.9%.
- Oil prices jumped with West Texas Intermediate crude up 0.9% at $55.30 a barrel, and Brent up 0.8% at $59.10.
- Gold dropped by 1% to $1,508 as investors dropped the haven asset for riskier holdings.
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