Global stocks edged higher today, extending Friday’s gains, despite poor economic data from China. The surprising contraction in Chinese exports in August didn’t scare investors. Market sentiment remains solid and got a boost from China’s PBoC announcement that they will cut cash reserves banks must hold, to the lowest level in 12 years, injecting liquidity into the domestic economy.
In addition, Jerome Powell’s dovish tone following a weaker-than-expected job report last Friday pushed investors to bet on further loosening from the Fed with at least another rate cut to come.
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On the European front, investors also expect further stimulus from the ECB. Measures could go from a rate cut to other options like a potential new bond purchase program and a dovish move by Mario Draghi is likely to boost stocks. According to the market configuration and expectations, it’s obvious that central banks are now, more than ever, playing a major role in the global economy and all eyes are on their strategies to stem fears of a global slowdown.
Elsewhere, UK MPs brace for a month with no Parliament as the prorogation looms. PM Boris Johnson’s plan for a “do-or-die” Brexit could be compromised as Labour Party may manage to pass a bill blocking a no-deal outcome today. In this situation, chances of a new general election will be on the rise, bringing further uncertainty to an already complicated case. The FTSE-100 index is recording the best performance of the old continent as prices are currently boosted by the Pound’s decline. The market is flirting with the 7,300.0pts zone which could open the way to 7,395.0pts if the current mood lingers.
