LONDON (Reuters) – Markets rose on Monday as stronger industrial activity in China showed signs of recovering from the coronavirus pandemic overcoming US-Sinos trade tensions.
FILE PHOTO: The London Stock Exchange Group’s offices are located in the City of London, UK, December 29, 2017. REUTERS / Toby Melville
The Euro STOXX 600 rose 0.4% and London’s FTSE .FTSE 0.5%. European oil and gas stocks .XXP was up 1.1% as rising oil prices added reasons for riskier betting.
Shares in BP (BP.L) and Royal Dutch Shell (RDSa.L) rose 2.6% and 1.5% respectively to Saudi Aramco (2222.SE) raised 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 China has returned to levels seen before the pandemic paralyzed enormous swathes of the economy, driven by rising demand, government stimulus and surprisingly strong 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 stock index .MIWD00000PUS, which tracks stocks in 49 countries, was flat. Wall Street futurometers ESc1 pointed to slim gains.
But progress was monitored by tensions between the United States and China ahead of planned trade talks over the weekend to revise the agreement signed in January.
Underscoring concerns, European tech stocks .SX8P lost 0.8% on tensions, the only sector to fall in early trading.
US President Donald Trump signs bans on Chinese social media platforms WeChat – owned by Chinese tech giant Tencent (0700.HK) – and TikTok begin 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.
Earlier, Asian stocks outside Japan saw .MIAPJ0000PUS in holiday-thin trading, staying below a high of six and a half months last week. They were flat for the last time.
Waiting for WASHINGTON
Further causing more uncertainty for investors are talks in Washington over a U.S. fiscal stimulus package. Chamber member Nancy Pelosi and Treasury Secretary Steven Mnuchin on Sunday said they were open to resuming talks.
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 gained 0.3% to 93,620 = USD and is still just above a two-year trough.
“The fresh stimulus provided by President Trump through executive orders is better than none at all and offers a stop-gap solution,” analysts at MUFG in London wrote.
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Report by Tom Wilson, edited by Larry King
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