Japan Slumps, Property Aid Boosts Chinese Stocks: Markets Wrap

(Bloomberg) — European stocks made a muted start to the week, held back by a slew of profit warnings from automakers that dulled the boost from China’s economic stimulus measures.

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Europe’s Stoxx 600 struggled to make headway as Jeep maker Stellantis NV fell 7.4% after cutting its profit margin forecast. Aston Martin Lagonda Global Holdings Plc slumped 14% and Volkswagen AG dropped after its second profit warning in three months. US equity futures kept to narrow ranges.

That was in contrast to the mood in China, where the CSI 300 Index jumped as much as 9.1%, the most since 2008, after three of China’s largest cities relaxed rules for homebuyers while the central bank also moved to lower mortgage rates. The steps were part of a package of measures announced last week.

China’s “government does seem more intent on following through on measures to get the economy firing again, so it does feel slightly more promising than previous attempts,” said Matthew Haupt, a portfolio manager at Wilson Asset Management. “So the rally might have some more legs than previous times and we will be waiting for more announcements to get more conviction around the trajectory of the Chinese economy and stock market.”

The Chinese measures spurred outperformance among European mining stocks, with Rio Tinto Group leading the sector’s advance. The dollar and Treasuries were steady.

Later this week, traders will be paying close attention to Eurozone inflation and manufacturing activity data, as well as the US jobs report on Friday, which will help assess the outlook for Federal Reserve interest-rate cuts into year-end.

Political developments in Europe constitute an additional risk. Austria’s traditional political powers are pledging to block the far-right Freedom Party from forming a government following Sunday’s national elections that resulted in its historic victory.

Elsewhere, a slump in Japanese stocks contributed to a decline in the MSCI Asia Pacific gauge, after the victory of Shigeru Ishiba in the Japanese ruling party’s leadership race wrong-footed investors.

Ishiba’s new administration will pursue continuity in economic, monetary and foreign policy, with the role of finance minister going to Katsunobu Kato, a former government spokesman, according to local media. The yen pared the previous session’s gains.

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Tensions in the Middle East were at risk of escalating once again after Israel’s killing of Hezbollah’s leader, Hassan Nasrallah, in Beirut. Oil rose on Monday, with the market waiting to see how Iran will respond and as traders responded to China’s stimulus measures.

Key events this week:

• Italy, Germany CPI on Monday

• Fed Chair Jerome Powell delivers speech at National Association for Business Economics conference in Nashville on Monday

• European Central Bank President Christine Lagarde speaks at EU Parliament monetary dialogue on Monday

• Bank of England policy maker Megan Greene joins panel at NABE to discuss global monetary policy on Monday

• Atlanta Fed President Raphael Bostic, Fed Governor Lisa Cook, Richmond Fed President Thomas Barkin and Boston Fed President Susan Collins attend conference on Tuesday

• ECB policy makers speaking at various locations include Olli Rehn, Luis de Guindos, Isabel Schnabel and Joachim Nagel on Tuesday

• BOE chief economist Huw Pill speaks at Confederation of British Industry economic growth board on Tuesday

• Bank of Japan issues summary of opinions for September on Tuesday

• South Korea CPI, S&P Global Manufacturing PMI on Wednesday

• Fed speakers include Richmond’s Thomas Barkin, Cleveland’s Beth Hammack, St. Louis’s Alberto Musalem and Fed Governor Michelle Bowman on Wednesday

• US nonfarm payrolls, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 fell 0.2% as of 8:28 a.m. London time

• S&P 500 futures were little changed

• Nasdaq 100 futures were little changed

• Futures on the Dow Jones Industrial Average were little changed

• The MSCI Asia Pacific Index fell 0.8%

• The MSCI Emerging Markets Index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.1166

• The Japanese yen rose 0.2% to 141.95 per dollar

• The offshore yuan fell 0.2% to 6.9949 per dollar

• The British pound was little changed at $1.3384

Cryptocurrencies

• Bitcoin fell 1.9% to $64,580.48

• Ether fell 0.8% to $2,641.44

Bonds

• The yield on 10-year Treasuries advanced one basis point to 3.76%

• Germany’s 10-year yield was little changed at 2.13%

• Britain’s 10-year yield was little changed at 3.99%

Commodities

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Chris Bourke, Matthew Burgess and Winnie Hsu.

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