China goes big, positive sentiment drives markets

Markets wait on a slew of crucial economic data to be released this week

By Nadia Elbilassy | @Nadia Elbilassy | 28 August 2023

midday (3)
  • European stocks edge higher following the recent stimulus measures implemented by China

  • Market participants keep a close eye on the NFP data marked Friday

  • WTI goes beyond $80 mark after risk on appetite takes over markets today

European stocks edge higher

With the release of hot economic data expected from the US this week, European stocks scored some gains pairing losses after Jerome Powell hinted the possibility of further interest rate hikes to be for the remainder of the year, although such decisions would be contingent upon the inflation rate.

The recent stimulus measures adopted by Chinese policymakers have had a positive impact on global stock markets. China's decision to reduce stamp duties on stock trading, a move not seen since 2008, and their commitment to slowing down the rate of initial public offerings have provided support to stocks across the world.

The Stoxx600 index has risen by 0.7%, the DAX index by 0.8%, the French CAC40 index by 0.9%, and the Italian FTMIB index more than 0.7%. It is worth noting that banks in the UK are closed for the summer bank holiday.

Moreover, in key market movers, Credit Suisse has now become a subsidiary of UBS following a government-facilitated acquisition, has announced a loss of $4 billion, the news could likely affect the banking sector.

Oil prices buoyed by market optimism

Following China's recent stimulus measures aimed at bolstering the economy, Oil prices quickly ramped higher. With Brent crude hovering near $84.67 per barrel, and WTI up 0.3% to break above $80.09 per barrel.

And despite the slower-than-expected interest rate cut by the People's Bank of China, the announcement made this morning on reducing stamp duties on stock trading has helped soften investor concerns regarding the slowdown of the world's second-largest economy.

However, it is important to consider the impact of economic data set to be released in China this week on oil prices. The manufacturing PMI figures might revive downward pressure on oil prices, given any further indications of contraction within the sector.