Stock markets across the Asia-Pacific region have jumped sharply today, following last night’s gains in Europe and the US.
Japan’s Nikkei gained 1.7%, with China’s CSI 300 up 1.3% and South Korea’s Kospi up 1.5%, as traders piled into shares.
Expectations that the US Federal Reserve (which meets later today) will cut interest rates in the coming months boosted markets.
ECB president Mario Draghi’s hint yesterday that he could unleash more eurozone stimulus also added to optimism.
Traders were also cheered by the news that the United States and China will revive trade war talks soon, with president’s Trump and Xi due to meet at the G20 summit later this month.
Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Institute, explains:
“Investors are taking heart from the new development.
The two countries will at least be talking (after a lull), so the market thinks there is little chance that talks get broken off soon after they meet,”
Introduction: UK inflation in focus
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
With Brexit uncertainty still gripping Britain, households could use a boost to real incomes. And the latest UK inflation data, due this morning, could provide it.
Economists predict that consumer price inflation slowed last month, to perhaps 1.9% from 2.1% in May. That would take the CPI index back below the Bank of England’s 2% target.
Crucially, this would mean wages are still rising faster than prices – as earnings are currently growing by 3.4% per year on average.
Analysts at TD Securities say:
“We look for headline inflation to slow to 1.9% year-on-year, while core inflation slows to 1.6% y/y.
The recent depreciation in sterling should help support inflation in May and beyond, and the dip in inflation in May is largely due to base effects in core inflation that will unwind in June.”
If inflation is falling, it takes some pressure off the Bank of England to raise interest rates soon. Conversely, should CPI spike today, it would give the BoE’s hawkish policymakers an excuse to consider hiking borrowing costs this year.
So watch the pound at 9.30am……
City investors, meanwhile, are in an upbeat mood after seeing stocks rally sharply yesterday.
European Central Bank president Mario Draghi ignited the rally by hinting that eurozone interest rates could be cut soon. That sent shares up, and the euro down — earning Draghi a blast from president Trump.
- 9.30am BST: UK inflation figures for May
- 9.30am BST: UK house price data for April
- 7pm BST: US Federal Reserve interest rate decision