Traders work on the floor of the New York Stock Exchange. Picture: REUTERS/BRENDAN McDERMIDWorld stocks rose for the sixth consecutive day on Wednesday and bond prices fell as investors continued to unwind safety bets, encouraged by hopes of a resolution to the Sino-US trade standoff and signs Europe may be preparing to ease budget spending rules.
There are hints China will go full-throttle with growth-stimulating measures after a raft of dismal data: having already eased banks’ cash curbs, it has now scrapped quota restrictions on two inbound investment schemes to lure more foreign capital. “The market is being driven by two extremes: one if we get further deceleration in trade, the probability of recession becomes quite high. But if we get a [Sino-US trade deal] we could see confidence coming back,” he added.
The yen had rocketed towards a 2019 high in August as investors fretted about recession and market sell-offs. Forex traders often buy the yen in times of uncertainty because of Japan’s vast current account surplus and because Japanese investors usually bring money home when global markets tank.“Yen weakness has been reinforced overnight by speculation that China will implement further measures to ease the negative economic impact from the trade war with the US,” MUFG analysts told clients.
Finance minister Olaf Scholz said on Tuesday that Germany could counter economic crises by injecting billions of euros into the economy. That lifted Germany’s 30-year borrowing costs above zero for the first time in more than a month while 10-year bond yields too are 20 basis points above record lows reached a week ago.