Global stocks posted gentle rises Tuesday, as central bankers around the world diverged over how best to address a clouded economic outlook.
The Stoxx Europe 600 climbed by 0.2% in morning trade, following a session of similar gains in Asia. The Shanghai Composite gained 0.3%, Hong Kong’s Hang Seng rose 0.2% and Japan’s Nikkei edged up 0.1%. “It’s a relatively small move, and what we’ve seen in recent days has been relatively thin, lacking conviction,” said
group head of investment solutions and chief economist at GAM investment. “Market participants are facing a conflicted news environment. The markets are really treading water.” Europe’s poor manufacturing and services data on Monday “cast a long shadow” on hopes that the European Central Bank’s latest stimulus package would “reflate” economic expectations, said Antoine Bouvet, senior rates strategist at ING Bank, in a note. “The key thing is that markets are recovering from a very weak day on Monday. It’s more of a reversal,” said Edward Park, deputy chief investment officer at Brooks Macdonald Asset Management. While investors had expected poor economic data this week from the euro area, they had not foreseen such a slump in the service sector, Mr. Park said. That triggered a selloff that would be unlikely to fully reverse even with some slightly improved economic signals. France’s official statistics hub said Tuesday that the business climate and employment levels had improved slightly in September, and Germany’s Ifo Institute’s measure of business optimism was slightly better than expected in September. However, while sentiment improved in Germany, Europe’s largest economy, long-term expectations fell to their lowest level in 10 years. Economic analysts still believe that there is a strong chance of a recession in the country once third-quarter gross domestic product figures are released.
A trader works on the floor of the New York Stock Exchange, Sept. 23, 2019.
Major central banks were mixed in their responses to recent weak data. The People’s Bank of China Gov.
said Tuesday the bank won’t follow the course of Western central banks with new stimulus, despite slowing growth, as the economy is still performing within expectations. Central bankers in Japan and the U.S., however, signaled a more wait-and-see approach.
president of the U.S. Federal Reserve Bank of St. Louis, said Monday that rate cuts had already offered an economic boost but that tensions in global trade were unlikely to stabilize. Bank of Japan Governor
said Tuesday that cuts to short-term interest rates would be more effective in supporting the economy, but also that he had no set expectations for the central bank’s next move at its meeting in October. In commodities, global oil benchmark Brent crude fell 0.9%. Gold, a traditional haven, edged down 0.2% after being driven up by economic fears on Monday. The U.S. 10-year Treasury yield ticked up slightly to 1.713% on Tuesday, from 1.704% on Monday. European government bond yields were also largely up, after the pressure of a poor economic outlook had weighed on yields Monday. Bond yields fall as prices rise. A range of U.S. data is expected later Monday, including the S&P/Case-Shiller home-price index, a gauge of consumer confidence and a manufacturing survey from the Richmond Fed. Write to Anna Isaac at firstname.lastname@example.org
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