MAJOR stock markets mostly rose yesterday as China moved to boost its flagging economy, while the pound hit a 15-month high against the dollar on expectations of more aggressive UK interest rate hikes.

Traders were looking ahead to US consumer price index data this week, set to provide fresh indication of the Federal Reserve’s interest rate plans to combat inflation.

Hong Kong was again one of the best performers after Beijing signalled a crackdown against the tech sector was nearing an end.

China has meanwhile urged banks and other financial institutions to provide easier terms for ailing property developers by renegotiating the terms of their loans, with the aim of ensuring homes under construction were delivered.

And yesterday, state-run financial newspapers said more announcements were in the pipeline as well as measures to boost business confidence.

The moves come as the vast property industry in China strains under the weight of enormous debts, with some firms such as Evergrande on the verge of collapse.

The crisis has sent shivers through the world’s number-two economy, which has in turn weighed on global growth. 

The chairman of Australian mining giant Rio Tinto this week warned of a knock-on effect on the commodities sector.

Beijing has come under immense pressure in recent months to unveil new growth-fuelling policies after a series of below-par indicators showed the post-Covid rebound has run off the tracks.

“The policies are intended to hedge against the strong headwinds in the market,” said Zhou Hao, of Guotai Junan International Holdings.

Pound jumps

Elsewhere, London stocks spent most of the day in the red as the pound strengthened, impacting share prices of multinationals’ earnings in dollars, but closed with a small gain as sterling gave up some of its gains during the afternoon.

The pound reached a 15-month high above US$1.29 (RM6.01) after UK jobs and wages data indicated that the Bank of England still had some way to go before it stops hiking interest rates aimed at cooling high inflation.

“While there are some signs the tightness in the labor market is starting to ease, wage growth remains uncomfortably high in the context of the Bank of England’s efforts to get surging prices under control,” noted AJ Bell investment director Russ Mould.

“Borrowers face more pain with the prospect of further rate hikes to come.”

Wall Street pushed higher as investors look forward to the release of the consumer price index on Wednesday, with expectations it will drop to 3.1% from 4.0% in May.

Cresset Capital’s Jack Ablin said the equity market’s gains suggest investors were “positioning” for a favourable inflation report today. 

But Oanda’s Edward Moya cautioned that “sticky inflation signs will likely remain” even if the report shows further moderation in prices.

Key figures around 2050 GMT

New York - Dow: UP 0.9% at 34,261.42 (close)

New York - S&P 500: UP 0.7% at 4,439.26 (close)

New York - Nasdaq: UP 0.6% at 13,760.70 (close)

London - FTSE 100: UP 0.1% at 7,282.52 (close)

Frankfurt - DAX: UP 0.8% at 15,790.34 (close)

Paris - CAC 40: UP 1.1% at 7,220.01 (close)

EURO STOXX 50: UP 0.7% at 4,286.56 (close)

Tokyo - Nikkei 225: FLAT at 32,203.57 (close)

Hong Kong - Hang Seng Index: UP 1.0% at 18,659.83 (close)

Shanghai - Composite: UP 0.6% at 3,221.37 (close)

Pound/dollar: UP at US$1.2931 from US$1.2861 on Monday

Euro/dollar: UP at US$1.1010 from US$1.1001

Dollar/yen: DOWN at  ¥140.36 from  ¥141.31

Euro/pound: DOWN at 85.13 pence from 85.53 pence

Brent North Sea crude: UP 2.2% US$79.40 per barrel 

West Texas Intermediate: UP 2.5% at US$74.83 per barrel – AFP, July 12, 2023.