Global Markets: Italy relief\, hopes for China stimulus buoy global stocks

Global Markets: Italy relief, hopes for China stimulus buoy global stocks

Reuters  |  LONDON 

By and Tom Wilson

Promises of tax cuts and coordinated official statements of support for stock markets in the world's second-largest saw Chinese shares stage their biggest one-day surge in three years. blue chips jumped around 4.3 percent, adding to Friday's bounce on Beijing's pledge of support for the and companies.

Japan's Nikkei rose 0.4 percent. Markets elsewhere in also enjoyed healthy gains..

European stocks climbed 0.2 percent after kept Italy's sovereign rating stable on Friday instead of cutting it to negative. The decision fuelled a rally in bonds and boosted shares in the country's banks.

The report and China's verbal support for its economy helped markets look beyond worries over the impact on global growth from policy tightening by the Federal reserve and the U.S.-trade war, market participants said.

"It looks like the Chinese authorities will do what they can to stem the negative effects of those factors," said

The mood was set to travel to U.S. markets, where E-Mini futures for the were 0.1 percent higher. Nasdaq's added 0.4 percent.

This week is the peak period of the U.S. earnings season, with Amazon, Alphabet, and among the companies reporting.

Helped by a strong economy and deep corporate tax cuts, earnings per share are expected to grow 22 percent in the third quarter, according to I/B/E/S data from

"The season on an absolute basis will likely wind up being 'strong' and the vast majority of companies will exceed consensus expectations," said analysts at in a note.

"However, headwinds are building at the margin in the form of U.S. dollar strength, supply chain disruptions owing to all the trade uncertainty, and rising costs. Even the mere hint of a turn in profit fundamentals would have severe ramifications."

The outlook for global growth in 2019 has dimmed for the first time, according to polls of economists, who cautioned that the U.S.-trade war and tightening financial conditions would trigger the next downturn.

ITALIAN RELIEF

On currency markets, the euro rallied after the report before pairing gains. By late morning it was down 0.1 percent at $1.15.

The single currency has benefited from comments by Italian Deputy Luigi Di Maio, who reiterated the country does not intend to leave the euro.

Bond yields dropped across the curve, with 10-year yields enjoying their biggest one-day drop since the June.

But later in the day, must explain to the its breach of rules. It faces the rejection of its budget, a move that could lead to sanctions.

The government expects the commission to decide on Tuesday to ask a member state to revise its draft budget, for the first time ever, a government source said on Sunday.

is also expected to be on the agenda when the European Central meets on Thursday. The is considered certain to keep policy on hold and is likely to put off discussion about its reinvestment policy until December.

The dollar was up 0.1 percent against a basket of currencies at 95.796.

Sterling, meanwhile, slipped 0.4 percent to $1.3022 as Brexit worries rose ahead of a speech to by

Though May will tell parliament that 95 percent of Britain's divorce deal has been agreed, she will repeat her opposition to the European Union's proposal for the land border with .

The border issue scuppered efforts to reach a Brexit deal at last week's EU summit, and many see the risk of a challenge to her leadership being mounted.

also remained in the spotlight after called the killing of a "huge and grave mistake" but sought to shield its powerful from the crisis.

U.S. and European leaders are pushing for more answers.

In commodity markets, Brent crude futures edged above $80 per barrel, with U.S. sanctions against Iran's crude exports due to be implemented next month.

Gold prices edged higher towards the 2 1/2-month peak hit last week.

(Additional reporting by in London and Wayne Cole in Sydney; editing by and Andrew Heavens)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, October 22 2018. 16:12 IST