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GLOBAL MARKETS-The bulls get back into China

Tue, 15th Sep 2020 12:10

* China economic data boosts markets, yuan at 16-month high

* Dollar in the doldrums, euro and EM FX on hot streaks

* Central bank meetings dominate week's agenda

* Oil up to $40 again, gold shines again

* Graphic: 2020 asset performance

* Graphic: World FX rates in 2020


By Marc Jones

LONDON, Sept 15 (Reuters) - World stocks rose on Tuesday on
the back of upbeat Chinese data and optimism about coronavirus
vaccines as a struggling dollar kept the hot streaks for the
euro and some of the biggest emerging market currencies

The euro's fifth day of gains made for a slow morning
in continental Europe but a solid 0.8% rise on London's
internationally- skewed FTSE maintained the overnight
momentum from Asia and Wall Street.

The day's eye-catching move was a 16-month high for the yuan
as 5.6% jump in Chinese industrial
output in August and the first pick-up in retail sales since the
coronavirus outbreak gave it its best day since July.

"Strong external demand, a further recovery from the
pandemic and pent-up demand from the floods all contributed to
the robust activity data in August," Ting Lu, chief China
economist at Nomura, said in a note to clients.

"We expect a further, albeit gradual, recovery of the
services sector, a steady improvement in retail sales and
elevated fixed-asset investment growth."

With sentiment also boosted by hopes for a COVID-19 vaccine
after British drugmaker AstraZeneca restarted its vaccine trial
and the dollar extending recent losses, other currencies were
also on the rise.

The euro was up 0.2% at $1.1891 after a surprise jump
too in Germany's ZEW sentiment survey, the
Australian and Kiwi dollars both gained as did Britain's pound
as traders showed little reaction to the government
winning the first parliamentary vote on its controversial new
Brexit bill.

With the yuan leading the charge, MSCI's EM FX index
also climbed to a near 7-month high..

"It is better risk appetite and the softer dollar
environment," ING's Chief EMEA FX and interest rate strategist,
Petr Krpata, said, though the approaching U.S. election was
likely to prevent too much of a run up, he added.


Overnight, MSCI's broadest index of Asia-Pacific shares
outside Japan had added 0.5%, for a fourth
straight day of gains that hoisted it up 3% for the year having
recently reversed its coronavirus plunge.

E-Mini futures for the S&P 500 put on 0.6%, also
reversing early losses, while Europe's STOXX 600 was
last up 0.5% having shaken off its slow start thanks to the
uplifting German ZEW readings.

"The September ZEW was a strong beat, with expectations
reaching a 20-year high and current conditions also exceeding
expectations," Morgan Stanley economist Markus Guetschow said,
although he did caution most other data was still gloomier.

The yen nudged higher as Japanese Chief Cabinet
Secretary Yoshihide Suga won a ruling party leadership vote, as
expected, paving the way for Japan's first change of leader in
nearly eight years.

Investors, meanwhile, took profit on a three-day rally in
Japan's stock market, pushing the Nikkei down 0.4%.

"He's seen as someone who's particularly stock market
friendly. The fact that we've got political certainty for the
next two years from someone who's connected to the free market
is going to be good news for Japan," said Jim McCafferty, joint
head of Asia Pacific equity research at Nomura.

There is still plenty of action to come this week.

U.S. retail sales figures from August are due on Wednesday
and the U.S. Federal Reserve starts a two-day policy meeting
later, the first since unveiling a landmark shift to a more
tolerant stance on inflation in August.

The Bank of Japan and the Bank of England are set to
announce their respective policy decisions on Thursday too.

In commodity markets, most industrial metals were bolstered
by the robust Chinese data.

Brent crude climbed back to $40 a barrel too
and gold prices put on 0.4%, extending a sharp rise in
the previous session.

(Additional Reporting by Anshuman Daga in Singapore; Editing by
Ana Nicolaci da Costa)

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