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European stock markets opened higher after signs that Chinese authorities were taking action to stimulate the slowdown in the country’s economy.
The UK’s FTSE 100 added 04%, as did Germany’s Xetra Dax. The regional Stoxx Europe 600 index rose 0.6%.
The Stoxx was also boosted by travel shares, as reports suggested the UK government would ease restrictions and quarantine rules in time for school holidays. British Airways owner IAG gained 4% and package vacation provider Tui added 5%.
The People’s Bank of China on Friday injected an additional $ 14 billion in short-term funds into the country’s banking system, its record since February. Analysts saw this as a move to ease lending conditions following a debt crisis at large home builder Evergrande.
In April, China’s central bank asked lenders to restrict the supply of credit to avoid asset bubbles, after the economy quickly came to life after the first wave of coronavirus.
Authorities nationwide are now grappling with a deceleration in industrial production, retail sales and the real estate market as outbreaks of the highly infectious Delta Covid-19 variant have dampened travel and put pressure on chains. global supply.
“We believe there is a bit more stimulus to come,†said Marco Willner, head of investment strategy at NN Investment Partners. “This year, we have seen efforts to rebalance the Chinese economy and take advantage of the real estate sector,†he added, “but maybe that was a bit too much and they are now going the other way. meaning so that next year can start on a positive footing.
The CSI 300 index of mainland China stocks gained 1%. Hong Kong’s Hang Seng Index rose 0.5% but remained on track for a quarterly loss of 14%.
The Financial Times on Friday revealed unpublished inflation forecasts from the European Central Bank which suggested it was on track to raise interest rates in just over two years.
The yield on the 10-year German Bund, a barometer of interest rate expectations in the eurozone, rose 0.02 percentage point to minus 0.293 percent.
“The FT’s conclusion that an interest rate take-off could already occur in 2023 is not in line with our expectations,” the ECB said.
“However, if a path to such a number appears soon in their forecast, it will impact ECB messages in the future, which will be important for the markets,” commented Jim Reid, Deutsche Bank strategist. .
Elsewhere, U.S. government bonds and major currencies have drifted ahead of next week’s Federal Reserve meeting, where it is expected to offer clues as to when it will cut its $ 120 billion a month bond purchases. in a time of crisis.
The yield on the 10-year US Treasury bill was flat at 1.331 percent.
The euro rose 0.1% against the dollar to buy $ 1.1780. The British pound was stable at $ 1.3798.
Retail sales in the United States were much stronger than economists expected in August, according to data released Thursday, spurring speculation that the Fed could take the first step towards unwinding its bond buying program this week.
Brent crude, the benchmark for oil, fell 0.5% to $ 75.30 a barrel.
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