GLOBAL MARKETS-Upbeat China data buoys sentiment in world share markets

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* Graphic: Global Asset Display

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* Graphic: World FX Rates

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LONDON, Nov 15 (Businesshala) – World stock markets rose to recent record highs on Monday as upbeat economic data from China eased worries about a slowdown in the world’s No. 2 economy, although prices on the mainland The decline dampened optimism.

Annual growth in retail sales and industrial output both beat forecasts, with a surge in consumption leading to a positive pandemic restrictions.

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But in a negative sign for the stressed housing market, China’s new home prices fell 0.2% month-on-month in October, the biggest drop since February 2015. And economists at CBA said there was a chance the Chinese central bank would cut bank reserves. Requirements (RRR) to support this week’s activity.

In Europe, investors picked up where they ended last week – sending the broader STOXX 600 index to record highs. US equity futures were flat to a firmer touch.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose nearly 0.4%.

“China’s economy has slowed more than expected and this year has taken a toll on investors’ minds,” said Seema Shah, chief strategist at Principal Global Investors in London. “So today’s data is better than expected and that’s a little bit reassuring.”

Japan’s Nikkei rose nearly 0.6% after data showed a slower-than-expected economic activity in the third quarter, fueling hopes for an aggressive fiscal stimulus.

Elsewhere, the United Nations Climate Conference in Scotland managed to reach an agreement on emissions, but only by undermining the commitment to phase out coal.

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Attention was expected to return when major central banks would respond to emerging inflationary pressures.

After rising sharply last week, a calmer tone re-emerged in major bond markets, fueled by stronger-than-expected US inflation data.

In early European trade, the benchmark 10-year US Treasury yield was 4 basis points lower on the day at 1.54%, having jumped 11 bps last week as markets positioned for an early monetary tightening by the Federal Reserve.

Germany’s 10-year Bund yield was 2 bps lower at -0.27%.

BofA economist Ethan Harris suspects that the market is still not priced high enough because higher initial levels of inflation mean further increases in rates are needed to reach neutral.

Harris warned, “If inflation remains high and comes above the planned overshoot, the Fed will need to become more rigid and either accept a market correction or intentionally induce such a correction. “

Higher US yields combined with general risk aversion to leverage the dollar, which has claimed its best week in nearly three months. Against a basket of currencies, the dollar was a touch lower at 95.088, but was at its highest level since July 2020.

It held at 113.96 yen, preparing for another challenge at October’s top of 114.69 and the euro held steady at around $1.1445, but remained weak.

European Central Bank President Christine Lagarde will appear before the European Parliament later on Monday.

US retail sales data went into focus on Tuesday for any indication that higher prices are taking a toll on consumer spending.

There are also doubts about whether firms have the pricing power to maintain margins in the face of rising costs.

Analysts at BofA noted that 75% of US companies had outpaced earnings estimates in the latest reporting season, but forecasts for the fourth quarter were only flat, breaking expectations for more than a year.

Meanwhile, gold fell last week from a more than five-month peak hit, as investors assessed whether rising inflation would signal a more aggressive response by central banks. It was last trading at $1,862 an ounce, down 0.1%.

Oil prices also started the week on the back foot, given a firming dollar and speculation that President Joe Biden’s administration would release oil from the US Strategic Petroleum Reserve.

Brent crude futures fell 54 cents, or 0.7%, to $81.64 a barrel. US West Texas Intermediate (WTI) crude was down 48 cents, or 0.6%, at $80.32 a barrel.

Reporting by Dhara Ranasinghe in London and Wayne Cole in Sydney; Editing by Angus McSwan


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