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China's central bank said overnight it was lowering how much
cash banks were required to hold, the eighth reduction since
2018. The move that should free around 800 billion yuan ($115
billion) to boost its economy.
In addition, U.S. President Donald Trump tweeted that a
long-awaited Phase 1 trade pact with Beijing would be signed on
Jan 15.
Europe's main markets gained 0.4% to 0.8%, following Asia higher
in their first trading session of the new decade. U.S. futures
suggested similar gains on Wall Street, with S&P 500 e-minis up
0.4%.
MSCI's broadest index of world shares added 0.2% to December's
3.3% jump and the 24% gained in 2019.
"Over a longer-term horizon, we believe global stocks have
greater performance potential than global bonds, supported by
continued growth and moderate inflation," Franklin Templeton
said in its 2020 outlook, although it stressed it remained
cautious for now.
Some gloomy euro zone manufacturing PMI data were revised
higher, which pushed up inflation expectations and saw Germany's
15-year bond yield briefly turn positive for the first time
since July.
"Although firms grew somewhat more optimistic about the year
ahead, a return to growth remains a long way off," said Chris
Williamson, chief business economist at IHS Markit, which
compiles the purchasing manager indices.
DOLLAR DALLIES
In currency markets, the dollar rose against major peers, but
the gains were capped amid expectations of a better outlook for
global growth and trade and an end to U.S. economic
outperformance.
The dollar was 0.1% stronger against the yen at 108.81. The euro
dropped 0.02% to 1.1208.
After the stimulus in Beijing, China's yuan closed at 6.9631,
its strongest finish against the dollar since Aug. 2. The
offshore yuan also gained after an initial downward move.
The cut in reserve requirements had been expected before
January's Lunar New Year holidays and after Premier Li Keqiang's
pledge last month to provide more stimulus.
China's blue-chip index, one of the world's best performers last
year, rose 1.4%, reaching its highest since Feb. 7, 2018. Hong
Kong's Hang Seng added 1.25%.
Oil prices rose as tensions in the Middle East fuelled worries
about supply. The U.S. military carried out air strikes against
an Iran-backed militia this past weekend. Consequently,
protesters stormed the U.S. Embassy in Baghdad on Wednesday,
then withdrew after the United States deployed extra troops.
U.S. crude was up 0.3% to $61.28 and global benchmark Brent
crude rose 0.4% to $66.27 per barrel, building on a rise that
gave oil markets their biggest annual gain in three years in
2019.
Gold, which had benefited from a weaker dollar, was up 0.25% on
the spot market despite the U.S. currency's gains. It last
fetched $1,520 per ounce.
($1 = 6.9633 Chinese yuan renminbi)
(Reporting by Marc Jones)
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