European stock markets are beginning the week with a quiet, tentative optimism. Stocks will open slightly higher on Monday.
The fragile calm follows a volatile week-end and a global background that is complex, with investors analyzing conflicting signals coming from China as well as the long lasting echo from a key policy suggestion from the US Federal Reserve.
Europe has to establish its own tone now that the US markets are closed on Labor Day. Early indications indicate a cautious, but positive, start.
IG’s data suggests that Germany’s DAX, Italy’s FTSE MIB and France’s CAC40 will all open up around 0.12% higher.
China’s conflicting signals on Asia: The Asian Ambiguity
Asia-Pacific is presenting a confusing and mixed picture. Overnight, the key data was dueling reports on manufacturing from China.
RatingDog, formerly known as the Caixin Prime Minister Index (PMI), showed a return to growth with a score of 50.5. The official data released by the government on Sunday remained at 49.4.
Investors are left wondering which signals to believe as this divergence gives a conflated picture of the second largest economy in the world.
A new partnership for the East: The diplomatic thaw
A more positive geopolitical narrative is emerging. Investors continue to evaluate the warming relations between India and China.
After a historic meeting held at the Shanghai Cooperation Organization Summit, both leaders agreed to be “development partners and not rivals”, a diplomatic breakthrough which could have positive long-term implications for trade, regional stability, and economic growth.
Shadow of the Fed: A dovish echoes lingers
Even though the economic calendar for Europe’s immediate future is relatively light, last week’s events are still having a significant impact on the markets.
The regional markets ended lower Friday, as traders struggled to make sense of a barrage of inflation statistics.
The week was defined by a Jerome Powell speech, widely perceived as being dovish and provoking expectations of a rate reduction at the next central bank meeting scheduled for September 16-17.
This quiet support of a more accommodative monetary policy is supplying a quiet and underlying boost to equities at the start of a new, uncertain week.
The post Europe Markets Open: Stocks to edge up with DAX rising 0.12% after US markets close could be updated as new developments unfold.
This site is for entertainment only. Click here to read more
