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LONDON (Reuters) – Global equity markets rose on Monday, suggesting that major economies would seek to support their slow growth by stimulating new stimulus, easing pressure on bonds and reducing demand for safe havens such as gold.
FILE PHOTO: A woman shows an e-board indicating the stock price while she poses in front of her after the New Year's opening ceremony at the Tokyo Stock Exchange (TSE), organized to wish the success of the Japanese stock exchange in Tokyo. Japan, January 4, 2019. REUTERS / Kim Kyung-Hoon
The hope of government action to dispel fears of recession – caused by a reversal of the yield curve of US bonds – has increased as the Chinese central bank unveiled interest rate reforms expected to reduce the costs of debt. business borrowing.
The prospect of the German coalition government abandoning its balanced budget rule to incur new debt and launch stimulus measures also contributed to the atmosphere, after boosting Wall Street shares on Friday.
Finance Minister Olaf Scholz said on Sunday that Berlin could release additional funds worth 50 billion euros ($ 55 billion), adding that Germany had the necessary budgetary capacity to do so. facing any future economic crisis "with all its might".
The MSCI World Equity Index, which tracks stocks in 47 countries, rose 0.3%, fueled by a 0.8% gain for the Euro STOXX 600. Prices in London .FTSE, Frankfurt and Paris increased between 0.7% and 0.9%.
Optimism was also expected to spread on Wall Street, where term gauges showed gains of between 0.9% and 1%.
Earlier in the day, the interest rate reforms of the People's Bank of China – which, it is said, would help reduce corporate borrowing costs and support the slowing economy – contributed to the 2.1% increase of .SSEC shares in Shanghai.
The broadest MSCI index of Asia-Pacific equities outside Japan gained 1.1%.
Yet, even if investors were emboldened by the reaction of the major economies to growth, some market participants warned, however, that the dynamism of the markets resulting from stimulus expectations was fragile.
"You just got a bit of portfolio readjustment, a readjustment of expectations. The big question is whether this can last, "said Michael Hewson, chief market strategist at CMC Markets. "Talking about fiscal stimulus in Germany is one thing, doing it is something else."
When investors regained their riskier assets, gold fell 1% to $ 1,499.30 an ounce, as the precious metal futures in the United States also fell.
The Japanese yen was stable.
The dollar index, which measures the greenback versus six major currencies, was slightly higher in Asia at 98.201, near the two-week high reached on Friday.
Investors are focusing on the annual meeting of central bankers in Jackson Hole, Wyoming, where US Federal Reserve Chairman Jerome Powell will speak at the symposium on Friday.
Analysts believe that Powell's remarks will aim to reassure nervous markets that the Fed will maintain its easing stance and set the stage for further rate cuts.
"What Powell has to say is at the center of the debate, because the gap between what he said about interest rates and what markets expect from the Fed," said Junichi Ishikawa, chief foreign exchange strategist at IG Securities in Tokyo.
The move towards the appetite for riskier assets has also played out in the bond markets.
The benchmark public debt in the euro area hit unprecedented lows as the yield on 10-year German bonds remained stable at -0.69%. Bond yields at 30 also rose.
The 10-year US Treasury yield stood at 1.526%, after squeezing out the three-year low marked last week by fears of a global market downturn.
In commodity markets, crude oil prices rose after a Saturday attack on a Saudi oil facility by Yemeni separatists, with traders also looking for signs of easing trade tensions between Canada and the states. -United.
Brent was up 65 cents, or about 1.1%, to $ 59.29 a barrel at 0805 GMT.
Reportage of Tom Wilson; Edited by Gareth Jones
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