European and Asian shares got the week off to a solid start yesterday, with Frankfurt breaking through the psychological level of 10,000 points, as investors eyed possible central bank action.
In London, the FTSE 100 up 0.57% at 6,174.57 points; Frankfurt - DAX 30 rose 1.62% at 9,990.26 points and Paris - CAC 40 up 0.31% at 4,506.59 points at the close yesterday.
Wall Street took a pause after a big rally, with trading steady after slipping on opening, and ahead of US Federal Reserve talks later in the week which will be closely watched for clues on any further rate hikes.
“US stocks are trending lower as decreasing oil prices weigh on energy stocks and investors pause ahead of the US Federal Reserve’s monetary policy meeting,” analysts Edward Jones said in an investor’s note.
After the Bank of Japan started its two-day meeting yesterday, the Bank of England makes up the week’s central bank trio, also meeting later this week to decide over the direction for interest rates and stimulus.
Mark Vickery, of Zacks, said the Federal Reserve was the “biggest thing on the docket for the markets this week”, even if the expectation was for no further change for the time being.
“No one really expects a new move this time around, considering the tightening global economy adding pressures that would be further amplified by another turn of the screw in the US,” he wrote in a note to investors.
Markets are also keen to see if Japanese policymakers unleash fresh stimulus after launching a widely-panned negative interest rate policy in January.
The Bank of England, meanwhile, is expected to leave its main lending rate at 0.50% at its Thursday meeting. A day earlier the British government also presents its annual budget.
The monetary policy meetings come after the European Central Bank (ECB) last week cut rates and boosted its bond-buying in a bid to kick start the tepid eurozone economy, in turn helping the German blue-chip DAX index to rally in recent days.
Yesterday, the DAX went above 10,000 for the first time since January 13, hitting an intra-day high of 10,039.61 points. It closed 1.62% higher.
European indices won a boost from a strong showing across Asia, after the new head of China’s new market regulator hinted at more action to support volatile mainland bourses.
Hong Kong closed up 1.2% and Shanghai tacked on 1.8%, despite more evidence of a slowdown in China’s economy—the world’s second-largest and a key driver of global growth.
Tokyo’s benchmark Nikkei 225 index finished 1.7-percent higher.
“Equity markets are making a solid start to the week, continuing with their post-ECB bounce,” said Mike van Dulken, head of research at Accendo Markets.
“Poor China data over the weekend has stoked the fires of stimulus hopes,” helping to lift commodity prices and mining groups’ shares.
In the first two months of the year, output at China’s factories, workshops and mines was the weakest since the global financial crisis, official figures showed on Saturday.
But Chinese shares got a lift yesterday after the new head of China’s stock-market regulator said at the weekend that the state would intervene “if the market is not working properly at all or continues to fall”.
“It will be too early to talk about withdrawing” state support for stocks “for rather a long time into the future”, said Liu Shiyu, chairman of the China Securities Regulatory Commission.