European shares are on track to jump higher after China stocks were put on course for their best week since 2008 amid Beijing’s efforts to inject life into the world’s second largest economy.
The UK’s FTSE 100, France’s Cac 40, Germany’s Dax and Italy’s FTSE MIB are all expected to rise 0.1pc to 0.2pc when markets open after China cut the amount banks must hold in reserve, releasing an estimated £106.6bn in liquidity into the financial market.
The move by the People’s Bank of China comes a day after President Xi Jinping and other top officials admitted to “new problems” in the world’s second-largest economy and outlined plans to get it back on track.
China and Hong stocks rallied following the measures, putting them on track for their best weekly performances in 16 years.
China’s blue-chip CSI300 and benchmark Shanghai Composite indexes have so far gained 15pc and 12pc, respectively, for the week. Hong Kong’s Hang Seng index has also added nearly 13pc.
Barclays analysts said: “At face value, all measures announced this week signal that the urgency of policy response is not lost on authorities – an important shift in a market that was looking for more than just the bare minimum.
“But in a scenario that would have more far-reaching effects on global assets, perhaps this week signals that China is looking to repair its national balance sheet structurally.”
Read the latest updates below.
European shares are on track to jump higher after China stocks were put on course for their best week since 2008 amid Beijing’s efforts to inject life into the world’s second largest economy.
The UK’s FTSE 100, France’s Cac 40, Germany’s Dax and Italy’s FTSE MIB are all expected to rise 0.1pc to 0.2pc when markets open after China cut the amount banks must hold in reserve, releasing an estimated £106.6bn in liquidity into the financial market.
The move by the People’s Bank of China comes a day after President Xi Jinping and other top officials admitted to “new problems” in the world’s second-largest economy and outlined plans to get it back on track.
China and Hong stocks rallied following the measures, putting them on track for their best weekly performances in 16 years.
China’s blue-chip CSI300 and benchmark Shanghai Composite indexes have so far gained 15pc and 12pc, respectively, for the week. Hong Kong’s Hang Seng index has also added nearly 13pc.
Barclays analysts said: “At face value, all measures announced this week signal that the urgency of policy response is not lost on authorities – an important shift in a market that was looking for more than just the bare minimum.
“But in a scenario that would have more far-reaching effects on global assets, perhaps this week signals that China is looking to repair its national balance sheet structurally.”
Thanks for joining me. European markets are on track to power higher after China freed up banks to inject another £100bn into the world’s second largest economy.
Stock indexes in the UK, France, Germany and Italy are poised to open higher following a major rally in China and Hong Kong shares, which are set to log their strongest weekly gains since 2008.
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What happened overnight
Stocks in Asia extended gains on Friday as risk appetite across financial markets got a further boost from China’s latest stimulus measures and upbeat US momentum.
The People’s Bank of China cut the amount banks must hold in reserve, releasing an estimated $142.6bn (£106.6bn) in liquidity into the financial market as leaders embark on one of their biggest drives in years to kickstart growth.
Also overnight, the bank cut the seven-day reverse repo rate – the short-term interest paid by the central bank on loans from commercial lenders – from 1.7pc to 1.5pc.
China’s benchmark CSI 300 Index looked set for its biggest weekly gain since 2008 after officials pledged to increase fiscal support and stabilise the property sector to revive growth.
The Hang Seng in Hong Kong advanced 3.7pc to 20,659.03 and the Shanghai Composite index jumped 2.1pc to 3,065.29.
Meanwhile, the Shanghai Stock Exchange encountered glitches that hindered order processing and caused delays after the market opened on Friday. This led to a 6.4pc increase in the Shenzhen index, as local media reported that investors flocked to that smaller market during the delay.
Trading returned to normal by noon, and the Shanghai Stock Exchange later said in a statement that it was still investigating the causes.
Elsewhere, Japan’s Nikkei 225 index was up more than 1pc as the ruling Liberal Democratic Party conducted a leadership election that will determine who is Japan’s next prime minister. The change in leadership is not expected to lead to any major policy shifts, given the similarities between the leading contenders.
Australia’s S&P/ASX 200 added nearly 0.1pc to 8,208.70. South Korea’s Kospi shed 0.2pc to 2,666.01.
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