(Bloomberg) — Stocks traded mixed at the end of a week that saw benchmarks in the U.S. and Europe hit records amid optimism about central bank easing and stimulus from China. The yen rose after the Japanese election results.
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Europe’s Stoxx 600 index edged higher and was on track for its best weekly performance since mid-August as pledges of economic support by Chinese leaders lifted luxury and mining stocks. U.S. futures headed lower after the S&P 500 hit its record 42nd closing record this year. Yields on the dollar and 10-year US government bonds were flat.
Daily announcements from China about its stimulus package, coupled with growing expectations for more rate cuts from the Federal Reserve, have fueled risk appetite in the markets. Traders will look for the Fed’s preferred inflation indicator, as well as a snapshot of consumer demand, which could provide further clues on rates after robust revised data on Thursday.
The Japanese yen recovered against the dollar as Shigeru Ishiba won elections for the leadership of the country’s ruling party. Ishiba, a party veteran who has held several senior positions including defense minister, is seen as a supporter of the Bank of Japan’s plan to gradually raise interest rates. He won against opponent Sanae Takaichi, who recently said it was “stupid to raise interest rates now.”
In China, the CSI 300 Index rose 4.5%, completing its best week since 2008. The People’s Bank of China unleashed one of the country’s boldest policy campaigns in decades, with Beijing rolling out a powerful stimulus package in a bid to shore up the economy. the slowing economy and investor confidence.
With share turnover reaching 710 billion yuan ($101 billion) in the first hour of trading Friday, the Shanghai Stock Exchange was marred by order processing glitches and delays, according to reports from brokers seen by Bloomberg News. Copper rose again above $10,000 per tonne and iron ore broke through $100 per tonne.
Urgent action
By holding the politburo meeting in September instead of December, China’s leaders “sent a signal that the authorities are willing to take more urgent action to achieve the 5% growth target,” said senior analysts including Robert Carnell of ING Groep NV, in a note. “We saw a more aggressive than expected policy package from the PBOC this week and it is reasonable to expect other policies to follow soon.”
Elsewhere in the commodities sector, oil held steady after a sharp two-day decline, with prices still on track for a substantial weekly decline on prospects of more supply from OPEC members Saudi Arabia and Libya.
Gold is heading for a third weekly gain after hitting back-to-back record highs on optimism that the Fed will maintain an aggressive pace of rate cuts this year.
Main events this week:
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Consumer confidence in the eurozone, Friday
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U.S. PCE, University of Michigan Consumer Confidence, Friday
Some of the major moves in the markets:
–With help from Winnie Hsu.
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