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European and Asian stocks rallied on Tuesday, as recent efforts by Beijing to prop up markets gave equities a boost, while Wall Street was steady ahead of closely watched jobs data.
Europe’s region-wide Stoxx Europe 600 index rose 0.6 per cent, as basic materials led gains, while France’s Cac 40 and Germany’s Dax both advanced 0.2 per cent.
The Stoxx Europe 600 Basic Resources index was up 1.6 per cent, as traders hoped that fresh economic support measures announced in China over the weekend would bolster demand in the world’s second-largest economy.
Hong Kong’s Hang Seng index advanced 2 per cent and the CSI 300 climbed 1 per cent on Tuesday. China’s benchmark index had risen 1.2 per cent a day earlier, after much larger early gains melted away.
Wall Street’s tech-focused Nasdaq Composite fell 0.2 per cent, while the benchmark S&P 500 was flat at the New York opening bell.
China’s Ministry of Finance on Sunday cut its levy on share trading to 0.05 per cent, the first such reduction since the 2008 financial crisis and the latest in a number of measures intended to support the country’s struggling markets.
Separately, the China Securities Regulatory Commission, a stock market regulator, promised to slow the pace of initial public offerings as new listings tend to depress valuations and lower liquidity in broader markets.
The moves mark the latest in a string of attempts by Chinese authorities to reinvigorate the economy, which struggled to bounce back as the country reopened from three years of strict Covid-19 lockdowns earlier this year.
“If policy measures continue to be unveiled in the coming weeks, the market narrative may shift from ‘too little, too late’ to a more confident stance as policymakers regain credibility,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
Beijing vowed to extend greater economic support in late July, which temporarily boosted net foreign inflows to Chinese stocks, but they have since been completely reversed.
The moves came as investors’ attention turned to fresh US labour market data later in the day, which was expected to show that the number of new job openings fell slightly to 9.465mn in July, in a sign that high interest rates were weighing on demand for workers.
The data comes ahead of the closely watched US non-farm payrolls report on Friday, which has been one of the key metrics feeding into the Federal Reserve’s policy decisions as its historic monetary tightening cycle approaches its end.
Having taken interest rates to a 22-year high at its previous meeting, the Fed last week signalled that its future decisions would be data-dependent, adding extra weight to the inflation and labour market reports due before the central bank’s next meeting in September.
The US personal consumption expenditures price index — the Fed’s preferred measure of inflation — is also due later this week.
Yields on the policy-sensitive two-year US Treasuries added 0.02 percentage points to 5.03 per cent, while yields on the benchmark 10-year note rose by the same amount to 4.23 per cent. Bond yields fall as prices rise.
The dollar, which tends to climb when investors anticipate higher interest rates, gained 0.3 per cent against a basket of six peer currencies, setting on track for its highest closing level since mid-March.
