Global stocks rose on Thursday after China announced a boost to infrastructure spending and as investors awaited the start of the much-anticipated Jackson Hole economic symposium of central bankers.
Europe’s regional Stoxx 600 added 0.7 per cent in early dealings, while futures contracts tracking Wall Street’s S&P 500 gauge and technology-heavy Nasdaq 100 added about 1 per cent.
Those moves followed gains for Asian equity markets, with Hong Kong’s Hang Seng adding 3.6 per cent and mainland China’s CSI 300 gauge rising 0.8 per cent. China’s state council, its cabinet, on Wednesday announced the addition of Rmb300bn ($44bn) in credit support by its policy banks, the state-controlled institutions used by Beijing to spur economic growth.
Traders were also poised for the beginning of the Jackson Hole, Wyoming conference on Thursday, where central bankers including US Federal Reserve chair Jay Powell will discuss the challenges ahead for the global economy.
The event, hosted by the Kansas City arm of the Fed, is closely watched by investors for signals on the future direction and pace of monetary policy.
Market pricing indicates that investors are expecting the Fed to raise interest rates to 3.7 per cent by February 2023, up from expectations of 3.3 per cent at the start of August. The central bank’s current target range stands at 2.25 per cent to 2.50 per cent.
In government bond markets, the yield on the benchmark 10-year US Treasury note fell 0.02 percentage points to 3.08 per cent. The yield on the 10-year UK gilt slipped 0.06 percentage points lower to 2.64 per cent, while the two-year gilt yield, which is sensitive to changes in interest rate expectations, fell 0.04 percentage points to 2.89 per cent. Bond prices rise as their yields fall.
A day earlier, concerns about the Bank of England and the European Central Bank raising interest rates more aggressively to curb inflation had sparked a sell-off in shorter dated debt instruments.
The sharp bond moves came at a time of weaker liquidity in European fixed-income markets because of summer holidays and increased economic uncertainty.
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