Economy
European shares rise on defensive boost, set for best week in 2 months
European shares climbed on Friday, underpinned by defensive healthcare and utilities stocks at the end of a week that was dominated by major central bank policy decisions.
The continent-wide European STOXX 600 index rose 0.4%. The index was on track for weekly gains of 1.4%, its best performance in two months.
The healthcare index gained nearly 1% and utilities climbed 0.9% to a seven-week peak.
The STOXX 600 had ended Thursday lower after the European Central Bank (ECB) raised borrowing costs and signalled more policy tightening in its fight against sticky inflation, a day after the U.S. Federal Reserve’s hawkish pause.
In contrast, the Bank of Japan (BoJ) maintained ultra-easy monetary policy on Friday despite stronger-than-expected inflation, signalling it will remain a dovish outlier among global central banks.
Giles Coghlan, chief market analyst at HYCM, said there were more similarities than differences between communiques from the Fed and the ECB, while the BoJ remained a clear outlier and added to hopes for looser global monetary policy.
“The Bank of Japan maintained their ultra-loose policy… so that’s another dovish tick, even though the Fed’s report was initially interpreted as hawkish, as the dust settled, traders are focusing more on that data dependency.”
The STOXX 600 showed signs of breaking away from a restrictive 1% trading range that was seen for much of the past two weeks, as investors gradually start putting behind major central bank events.
Still, the Bank of England rate decision is due next week and the central bank is likely to raise interest rates by a quarter point to a 15-year high of 4.75%.
Shares of Rheinmetall gained 3.3% after the defence contractor said it expects to strike an ammunition deal worth billions of euros with the German government in the coming weeks.
Stockholm-listed shares of Millicom slid 6% to the bottom of the STOXX 600. The Luxembourg-based telecom group said on Thursday that talks with Apollo Global Management and Claure Group about a potential bid for the company had been terminated.
Shares of Travis Perkins, Britain’s biggest supplier of building materials, dropped nearly 5% after the company flagged that profit would be hit by challenges in the country’s housing market.
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo
SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.
With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.
The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.
China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.
The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.
“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.
The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.
($1 = 7.1315 renminbi)
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
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