LONDON – European stocks rose and US stock index futures pointed to a stronger open for Wall Street on Monday with risk appetite fueled by a US infrastructure bill, although oil prices were affected by concerns about Chinese demand.
The MSCI World Stock Index, which tracks stocks in 49 countries, rose 0.4% at 1114 GMT, after Asian stocks recovered some of their recent losses.
MSCI’s main European index rose around 0.3%, while the Stoxx 600 reached a new all-time high in early trading, before gradually declining to 0.3%.
Manufacturing activity in the euro zone continued to expand at a dizzying pace in July as the reopening of the economy triggered a skyrocketing demand, but supply bottlenecks sent input costs skyrocketing.
The Purchasing Managers Index (PMI) survey came after official data on Friday showed the bloc’s economy grew faster than expected in the second quarter.
George Buckley, Nomura’s chief economist for the UK and the euro zone, said he expects economic activity to remain strong, but a key question among clients is when the growth rate will slow.
“In my opinion, we are likely to see a very steep drop in PMIs, not because we are seeing a much weaker outlook, but … now the lower fruit has been picked.”
Risk appetite was also fueled by the prospect of increased fiscal stimulus in the United States, as senators introduced a comprehensive $ 1 trillion infrastructure spending plan.
Wall Street futures rose, the S&P 500 e-minis rose 0.4% and the Dow e-minis rose 0.2%.
Earlier in the session, Chinese stocks rallied after a selloff caused by Beijing’s regulatory crackdown.
The main decision-making body of the Communist Party of China said on Friday that China will maintain its current economic policies in the second half of the year.
“We believe that regulatory changes will continue and the direction is unlikely to reverse, although the pace could adjust,” JP Morgan strategists wrote in a note to clients.
Oil prices fell after a survey found that growth in China’s manufacturing activity slowed sharply in July as demand contracted for the first time in more than a year, raising concerns about demand in the US. second largest oil consumer in the world.
At 1122 GMT, Brent crude futures were down 1.3% and US West Texas Intermediate (WTI) crude futures were down 1.5% on the day.
Market attention is now focused on US manufacturing activity data for July, as well as the Reserve Bank of Australia meeting on Tuesday, the Bank of England meeting on Thursday, and data for the US payrolls on Friday.
Key bond yields declined in July. As the new month began, the yield on Europe’s 10-year benchmark German Bund was slightly higher on the day at -0.448%, having started July at around -0.2%.
The 10-year US Treasury yield stood at 1.2288%, little changed on the day, but a gradual decline from April.
In currencies, the dollar index was down about 0.2% to 91.969, just above a month-long low, while the euro was up about 0.2% at $ 1.1887.
The Australian dollar, which is considered a liquid indicator of risk appetite, was up 0.2%.
(Reporting by Elizabeth Howcroft; Editing by Mike Harrison, Kirsten Donovan)