© Reuters. Pedestrians wearing face masks walk across an intersection with an electronic board displaying stock information in Shanghai.2/2
By Tom Wilson
LONDON (Reuters) – European stocks rose on Monday as industrial activity in China picked up, another sign of recovery from the coronavirus pandemic that added hope that the world economy would return to health as well.
The broader Euro STOXX 600 () rose 0.6%, with London’s FTSE () rising 1% and European oil and gas stocks () rising 2% on rising oil prices.
Shares in BP (L 🙂 and Royal Dutch Shell (L 🙂 rose 3.4% and 2.7% respectively Saudi Aramco (SE 🙂 drew optimism about a growth in Asian demand and Iraq promised to further reduce supply. [O/R]
Deflation at factories in China demanded in July, data showed, driven by rising global energy prices and as industrial activity climbed back to pre-coronavirus levels.
Industrial output in the world’s second-largest economy is slowly returning to levels seen before the pandemic paralyzed enormous swathes of the economy, driven by rising demand, government stimulus and surprisingly real exports.
That bodes well for the global recovery from the coronavirus pandemic, marketers said.
“China is so advanced in this process of lockdowns and outbound lockdown that all the good signs for the Chinese economy are essential (for the world economy),” said Florian Ielpo, head of macroeconomic research at Unigestion.
The MSCI World Axis Index (), which tracks equities in 49 countries, gained 0.1%. Wall Street futuremeters () pointed to a positive start.
But progress was controlled by tensions between the United States and China. Uncertainty about a deal on a U.S. incentive package also weighed on markets
US President Donald Trump has signed executive orders banning Chinese social media platforms WeChat – owned by Chinese tech giant Tencent (HK 🙂 – and TikTok starting next month, imposing sanctions on 11 Hong Kong and Chinese officials.
U.S. regulators also recommend that overseas companies listed on U.S. exchanges be subject to U.S. 2022 U.S. public audits.
US-China tensions have raised concerns about a detrimental impact on trade talks. Any friction here could complicate the global recovery from the coronavirus pandemic, investors said.
Underscoring concerns, European tech stocks () lost 0.8% on tensions between Washington and Beijing, the only sector to fall in early trade.
Earlier, Asian equities outside Japan () were seen in holiday-thin trading, staying below a high of six and a half months last week. They were last up 0.1%.
Waiting for WASHINGTON
Further causing further uncertainty for investors are ongoing talks in Washington over a U.S. fiscal stimulus package that has rocked the U.S. dollar.
Second Chamber member Nancy Pelosi and Treasury Secretary Steven Mnuchin on Sunday said they were open to resuming talks on aid.
Trump has sought to take matters into his own hands, signing executive orders and memoranda focusing on unemployment benefits, layoffs, student loans and payroll taxes.
With investors worried that the recovery of the US could lag behind those in other major economies, the two-year supremacy of the dollar has slipped.
Against a currency exchange rate, the dollar was a fraction stronger at 93,339 () and still just above a two-year trough.
“The fresh stimulus provided by President Trump through executive orders is better than not at all and offers a stop gap solution,” analysts at MUFG in London wrote.
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