World stocks rose sharply on Monday, with traders betting on government stimulus measures and celebrating a better prospect for the US-China trade war. According to Bloomberg, China made an announcement that the new loan will be benchmarked against the rates charged by banks to its best customers. In addition, China also promised to provide cheaper loans to both families and companies. According to Reuters, Germany said that it could find 55 billion US$ to cope with the economic downturn after the economy contracted in the last quarter. Later this week, the Chair of the Federal Reserve Board (FED), Mr. Jerome Powell may indicate cuts to interest rates this year. In a morning report, on Monday, Jasper Lawler, Research Head at London Capital Group, said that all three of these factors are helping to boost the sentiment. The expected growth of stimulus measures from countries around the world will greatly help to boost the sentiment.
At the same time, Donald Trump eased concerns about a further escalation of the trade war between the two largest economies of the world. The US president, Donald Trump on Sunday tweeted: “Our relationship with China is very good and is talking about!” This sparked hopes for the US-China war resolution. According to Bloomberg, Mr. Larry Kudlow, the Director of the National Economic Council under President Donald Trump since 2018, further added that there have been “positive” calls from both sides. However, Trump warned that any agreement could be broken if the Chinese government took violent measures to quell Hong Kong’s ongoing protests. He also doubts that his government will extend the ban for more 90 days on the US companies trading with Huawei, the Chinese tech titan.
The market rounded up as of 10:20 AM
- US stocks opened higher with the S&P 500 and the Dow Jones Industrial Average up 0.8%, and the Nasdaq up 0.9%.
- European equities climbed with the Euro Stoxx 50 up 0.7%, Britain’s FTSE 100 up 0.7%, and Germany’s DAX up 0.8%.
- Asian stocks rose with Japan’s Nikkei up 0.7%, China’s Shanghai Composite up 2.1%, and Hong Kong’s Hang Seng up 2.2%.
- Oil prices jumped with Brent up 0.8% at 59.1 US$ and West Texas Intermediate crude up 0.9% at 55.3 US$ a barrel.
- Gold slid by 1% to $1,508 as investors dropped the haven asset for riskier holdings.