Falling inflation clears path for extra price cuts
Thanks for joining me. European markets are on track to power higher after China freed up banks to inject another £100bn into the world’s second largest economy.
Stock indexes in the UK, France, Germany and Italy are poised to open higher following a major rally in China and Hong Kong shares, which are set to log their strongest weekly gains since 2008.
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4) Why ‘Mr Brexit’ is plotting a tax raid on France’s rich | Hard-nosed negotiator Michel Barnier faces his toughest challenge to date in trying to corral his countrymen
5) Matthew Lynn: Labour’s bitter war on wealth has already flopped | Non-dom clampdown will force Reeves to raise other taxes or else increase borrowing
What happened overnight
Stocks in Asia extended gains on Friday as risk appetite across financial markets got a further boost from China’s latest stimulus measures and upbeat US momentum.
The People’s Bank of China cut the amount banks must hold in reserve, releasing an estimated $142.6bn (£106.6bn) in liquidity into the financial market as leaders embark on one of their biggest drives in years to kickstart growth.
Also overnight, the bank cut the seven-day reverse repo rate – the short-term interest paid by the central bank on loans from commercial lenders – from 1.7pc to 1.5pc.
China’s benchmark CSI 300 Index looked set for its biggest weekly gain since 2008 after officials pledged to increase fiscal support and stabilise the property sector to revive growth.
The Hang Seng in Hong Kong advanced 3.7pc to 20,659.03 and the Shanghai Composite index jumped 2.1pc to 3,065.29.
Meanwhile, the Shanghai Stock Exchange encountered glitches that hindered order processing and caused delays after the market opened on Friday. This led to a 6.4pc increase in the Shenzhen index, as local media reported that investors flocked to that smaller market during the delay.
Trading returned to normal by noon, and the Shanghai Stock Exchange later said in a statement that it was still investigating the causes.
Elsewhere, Japan’s Nikkei 225 index was up more than 1pc as the ruling Liberal Democratic Party conducted a leadership election that will determine who is Japan’s next prime minister. The change in leadership is not expected to lead to any major policy shifts, given the similarities between the leading contenders.
Australia’s S&P/ASX 200 added nearly 0.1pc to 8,208.70. South Korea’s Kospi shed 0.2pc to 2,666.01.
On Wall Street, the S&P 500 scored a record closing high and the Dow and Nasdaq rose.
The S&P 500 closed up 0.4pc, at 5,745.37. The blue-chip Dow Jones Industrial Average rose 0.6pc, to 42,175.11. The Nasdaq Composite advanced 0.6pc, to 18,190.29.
The yield on 10-year US Treasury notes, which influence investment decisions around the globe, rose to 3.80pc yesterday evening from 3.79 late on Wednesday.
