LONDON: World shares remained near a five-month high on Tuesday as China cut its growth targets to a 30-year low but added more stimulus, and a revived dollar headed for a fifth day of gains in the currency markets.
German and French services data helped Europe’s STOXX 600 index towards a fourth day of gains, though with Italy confirmed back in recession and after a 15 per cent surge this year, there was a little in the way of fresh energy.
Asia had struggled after Beijing made a widely expected move at the National People’s Congress to lower its growth target to 6 to 6.5 per cent from last year’s 6.5 per cent.
Chinese stocks gained, however. Premier Li Keqiang announced nearly 2 trillion yuan (Dh1.10tr; $298.31 billion) of cuts in taxes and companies fees. Authorities also stepped up efforts to get big banks to lend more.
“You have had positive news on trade and positive news on the Federal Reserve (pausing rate hikes), so you have had less to worry about, but what hasn’t really gone away is this slowdown in global growth,” JP Morgan Asset Management strategist Mike Bell said.
Wall Street’s major indexes were expected to open lower after falling on Monday. An unexpected decline in US construction spending was cited as a factor.
Fatigue is clearly playing a role, though. MSCI’s All Country World Index which covers 47 economies and thousands of individual stocks, has now risen 16 per cent from its near two-year low set on Dec. 26 low.
It barely budged on Tuesday, but the index is now trading at 14.6 times expected earnings, on par with levels in early October, when a bear market began globally.
A media report on Monday that US President Donald Trump and Chinese President Xi Jinping could reach a formal trade deal at a summit around March 27.
Trump looked to have already opened a new front on Monday with a plan to end preferential trade treatment for India that allows duty-free entry for up to $5.6 billion worth of its exports to the United States.
In currency markets, the dollar gained with other major central banks expected to tilt to a more dovish stance than the Federal Reserve.
The euro slipped 0.1 per cent to $1.1330, amid expectations the European Central Bank will prepare the ground for more ultra-cheap long-term funding at its policy meeting on Thursday.
The dollar rose 0.2 per cent against the yen to 111.93 yen, near Friday’s 10-week high of 112.08.
Britain’s pound was helped back towards $1.32 by services data while the Australian dollar fell 0.20 per cent to $0.7072 after a weak exports survey suggested the Australian economy came close to stalling last quarter.
Gold at $1,288.2 was looking set for a fifth straight day of declines, which would mark its worst run since November.
Oil prices drifted down but remained near their three-month peaks.
US crude futures stood at $56.38 per barrel, down 0.4 per cent but still up almost 1 per cent on the week.
International benchmark Brent futures were down 0.4 per cent at $65.41 per barrel.