Written by Neil McKenzie and Wayne Cole
LONDON/SYDNEY (Reuters) – Global stocks fell on Monday as economic uncertainty fueled by conflicts in the Middle East overshadowed policy measures aimed at reviving markets, ahead of a busy week of data that could determine central banks’ next steps.
Continued Israeli raids across Lebanon added geopolitical uncertainty to the mix, although oil prices were still constrained by the risk of oversupply. (or)
Futures rose 52 cents to $72.50, while West Texas Intermediate crude rose 40 cents to $68.58.
While Storm Helen has mostly passed, leaving devastation across many parts of the southern United States, a new landfalling tropical depression is expected to develop into another large and powerful hurricane later this week.
Hurricanes hitting the southern and eastern coast of the United States are disrupting the supply chain of petroleum products and raising concerns about supplies from the world’s current largest oil producer.
Meanwhile, brokerages in China were overwhelmed by a pre-holiday rush of retail clients, jamming trading systems as investors rotated money from bonds and deposits into stocks.
Government stimulus measures announced last week continued to boost Chinese stock markets, with the blue-chip CSI300 index closing 8.5% higher, its biggest daily gain since 2008 and adding to its 25% rise in the past five trading sessions.
The index rose by 7.1%, in addition to last week’s rise of 13%. Stocks fell and closed down about 5% amid concerns that the country’s new prime minister favors normalizing interest rates but may increase taxes on investments and companies.
This helped the dollar stabilize at around 142.44 yen, after it fell 1.8% on Friday from the highest level of 146.49 yen. (USD/)
Shallow markets in Asia were of no help to Europe, which opened lower on Monday as investors braced for a week full of economic data.
The index fell in recent trading by 0.7%, affected by profit warnings and weak growth expectations from the automobile sector.
“Chinese stimulus has created some noise, but the market may be ahead in these first few steps, which could lead to disappointment later if the measures do not continue,” said Matt Tickle, chief investment officer at Barnett Waddingham Advisory.
Tickle said he wouldn’t feel comfortable with longer-term topics until he was sure what was coming next, not just from China’s central bank, but from policymakers around the world.
“It’s central bank monitoring again,” Tickle said.
The week is filled with key US economic data including a jobs report that could decide whether the Fed delivers another big interest rate cut in November.
Wall Street is on a roll
The rise in China helped MSCI’s broadest index of Asia-Pacific shares outside Japan rise 0.1%, after rising more than 6% last week to its highest level in seven months.
Wall Street also had an exciting week supported by a benign US core inflation reading on Friday which left the door open for another half-point interest rate cut from the Federal Reserve.
Futures indicate a 55% probability that the Fed will ease monetary policy by 50 basis points on November 7, although the presidential election two days ago remains a major unknown.
A group of Fed spokesmen are scheduled to deliver their opinions this week, led by Chairman Jerome Powell later on Monday. Data on private sector job opportunities and employment are also due, along with ISM surveys on manufacturing and services.
Nasdaq futures fell 0.1%, while futures fell 0.2%. The index is up 20% year to date and is on track for its strongest January-September performance since 1997.
In currency markets, the index fell 0.2% to 100.22 after falling 0.3% last week. The euro rose 0.3 percent to $1.1200 after rebounding on Friday following a moderate inflation report in the United States. (USD/)
The Eurozone releases inflation figures this week, along with producer prices and unemployment. German inflation and retail sales are due to be released later on Monday, while European Central Bank President Christine Lagarde speaks before the European Parliament.
A weaker dollar combined with lower bond yields helped gold reach $2,685 an ounce. It was last at $2,650 an ounce, on track for its best quarter since 2016.