Global Stocks Lifted by Robust Economic Data — 6th Update
Global stocks rose Thursday as economic data out of the U.S., the eurozone and China beat expectations.
Futures pointed to an 0.2% opening gain for both the S&P 500 and the Dow Jones Industrial Average.
The Stoxx Europe 600 was up 0.8% with British, German and French stocks all rising by similar amounts.
The euro dipped slightly against the dollar, falling by 0.5% to $1.1830, on the back of media reports that European Central Bank officials are concerned about the single currency’s surge in the past four months.
This helped the WSJ Dollar Index tick higher, up 0.3%, after rising 0.4% Wednesday. Against the yen, the greenback rose 0.3%, back above 110.
Eurozone inflation data released Thursday was above forecasts, with consumer prices rising 1.5% in August but still below ECB’s target of just under 2%. Core inflation, a measure that strips of volatile items such as food and fuel, held steady at 1.2%.
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A stronger euro could damp inflation gains by making imported goods and services cheaper.
“We see the risks as still skewed toward the euro overshooting above 1.20 at some point this year rather than permanently reversing lower,” said Deutsche Bank strategist George Saravelos in a note to clients published Thursday.
The euro’s recent strength led to an end-2017 forecast upgrade from Bank of America Merrill Lynch this week, to $1.15 from $1.08. Some analysts foresee the common currency rising even further than its current levels.
Analysts are, however, split as to whether eurozone inflation has the potential to continue rising.
“We expect the uptrend in core inflation to continue in coming months, even without wage growth improvements, as GDP growth should remain above trend,” said analysts at Citigroup after the data release.
Others disagreed. “We do not expect a further rise in the core inflation rate,” said Commerzbank analyst Christoph Weil. “On the contrary, should recent euro appreciation prove lasting, the core rate could even drop below 1% again.”
“Everyone’s used to writing gloomy stories about Europe, but you’re starting to get a nicely aligned, coordinated economic upswing,” said Stewart Robertson, senior economist at Aviva Investors.
“There’s been a great deal more political harmony than anyone had really expected at the start of the year,” he said. “But inflation is still struggling to come back.”
Gains for the U.S. dollar drove Japanese equities Thursday as the greenback recouped some losses made earlier in the week. The Nikkei Stock Average closed up 0.7%, after weakening in 14 of the past 19 trading sessions, leaving the index down for August.
Many other markets in the region are poised to emerge from a volatile summer largely unscathed, with double-digit gains for the year.
The Shenzhen A Share index closed up 0.3%, after China’s August manufacturing purchasing managers index came in above expectations at 51.7–any figure above 50 indicates that the industry surveyed is growing.
“The summer break sees investors returning to markets not looking much different from when they left,” wrote Mark Tinker, head of AXA IM Framlington Equities Asia. Markets witnessed bouts of selling in August over tensions between North Korea and the U.S., though shares mostly recovered within a short span.
Write to Mike Bird at Mike.Bird@wsj.com and Kenan Machado at firstname.lastname@example.org
(END) Dow Jones Newswires
August 31, 2017 09:13 ET (13:13 GMT)