Stock markets in Europe and Asia rose as China unveiled plans to stimulate consumer spending amid concerns over U.S. tariffs. The strategy includes enhancing incomes, stabilizing the stock market, and encouraging borrowing for consumption. Mixed economic signals and upcoming policy decisions from central banks are also influencing investor sentiment.
On Monday, European and Asian stock markets experienced an uptick, primarily driven by China’s strategic plan to stimulate consumption in the country, the world’s second-largest economy. This positive response followed a significant rally on Wall Street, encouraged by expectations that United States lawmakers would pass a crucial spending bill to avoid a government shutdown. Susannah Streeter, head of money and markets at Hargreaves Lansdown, noted, “Hopes that a new consumer life raft in China will buoy up the country’s prospects of recovery have helped lift sentiment slightly, but caution remains.”
Attention focused on Beijing, where officials were set to present measures aimed at increasing consumer spending, addressing the economic stagnation observed since the post-COVID period. Key elements of the plan include boosting incomes through property reforms, stabilizing the stock market, and incentivizing banks to offer consumption loans with manageable terms. Furthermore, there are considerations for raising pension benefits, implementing a childcare subsidy program, and legally guaranteeing workers’ rights to time off.
The timing of these announcements follows concerning data, revealing that consumer prices have entered deflation for the first time in a year, while producer prices continue to decline. Economists from Moody’s Analytics expressed concerns regarding the difficulties Chinese leaders face amidst the ongoing trade tensions led by U.S. President Donald Trump. They stated, “With China firmly in US President Donald Trump’s sights, deflation concerns in China will worsen. The chaos of tariffs and rising unemployment will keep consumer spending weak, denting inflation’s demand drivers.”
As the trading day progressed, major stock indices in London, Paris, and Frankfurt reported gains, mirroring the positive momentum seen in Asian markets. Hong Kong benefitted from a strong start to the year, particularly in the technology sector, while Shanghai and Tokyo also showed healthy market performance.
Market participants are also looking forward to monetary policy decisions from the Federal Reserve, the Bank of Japan, and the Bank of England, all anticipated to keep interest rates steady. In conjunction with its policy updates, the Fed is expected to release its economic projections, emphasizing the need to mitigate potential inflationary pressures resulting from tariff policies.
In commodity markets, gold was trading around $3,000 per ounce following its recent surge due to increased demand for safe-haven assets amidst tariff concerns. As of around 1100 GMT, various market indices and currency values reflect modest gains, indicating a cautious but optimistic sentiment among investors.
In summary, the recent rise in European and Asian stock markets is largely attributed to China’s initiatives to spur consumer spending, aiming to revitalize economic growth. As investors remain watchful of potential U.S. tariffs and their implications, key economic policymaking meetings scheduled for this week will further shape market trajectories. The increasing interest in safe-haven assets like gold underscores ongoing concerns about economic stability.
Original Source: www.news-graphic.com
