By Rae Wee and Alun John
SINGAPORE/LONDON (Reuters) – European shares followed Asia higher on Thursday, driven by news of aggressive economic stimulus from China and a fall in oil prices on a report that Saudi Arabia is preparing to abandon its unofficial price target of $100 a barrel.
Europe’s Stoxx 600 jumped 1% in early trading, closing in on August’s all-time high, while Chinese onshore bluechips and Hong Kong’s Hang Seng Index were both up over 4%. [.EU] [.SS]
An index of mainland Chinese property stocks rose 15%.
Driving the optimism was an official readout from a meeting of China’s politburo that said China would deploy “necessary fiscal spending” to meet this year’s economic growth target of roughly 5%, acknowledging new problems and raising market expectations for fresh stimulus on top of measures announced this week.
“This stimulus package endorsed by today’s Politburo meeting represents a strategic shift in macro policy, from piecemeal policies to a highly orchestrated package in a more balanced and coordinated manner,” said Bruce Pang, chief economist for Greater China at Jones Lang LaSalle.
He added that as the readout said there were new situations and issues, it “suggested time is tight and the task is urgent”.
The news came hours after a Bloomberg report that said Beijing is considering injecting up to 1 trillion yuan ($142.39 billion) of capital into its biggest state banks.
Also, in the mix, Brent and U.S. crude futures were each down over 2% after the Financial Times reported, citing people familiar with the matter, that Saudi Arabia is preparing to abandon its unofficial price target of $100 a barrel for crude as it prepares to increase output. [O/R]
European energy stocks, down around 3%, were the only sector to be well in the red. Elsewhere the combined impact of the stories was good for everything from tech stocks in Europe and Asia to European luxury shares and national bourses from Spain to South Korea.
S&P futures were up 0.75% and Nasdaq futures were up 1.36%, given an extra boost by an after-hours surge by Micron Technology shares after it forecast higher than expected revenue due to AI demand for chips, also a factor in Korean share gains. [.N]
RATES OUTLOOK
Central banks were in focus too, and the Swiss National Bank cut rates by 25 basis points on Thursday, choosing not to go for a larger 50-bp move that markets had seen as a possibility. It was the SNB’s third such move this year.
That caused a knee-jerk strengthening in the Swiss franc against the dollar and euro, but that did not hold, and it was last at 0.9461 to the common European currency.
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.