World shares rose yesterday, with Chinese stocks hitting 21-month highs and the German index setting a new record, while political uncertainty triggered big moves in sterling, the Turkish lira and Spanish debt.
Wall Street looked set to open higher, with e-mini futures on the S&P 500 index up 0.2 per cent and signalling a rebound from Friday’s fall after six days of gains.
European shares rose. The pan-European STOXX 600 index added 0.3 per cent and Germany’s DAX touched an all-time high after data showing industrial output far overshot forecasts.
Spanish shares outperformed, rising 0.6 per cent, and Spain’s government bond yields fell after a big show of support for the country remaining together and against Catalan independence appeared to calm markets.
Hundreds of thousands demonstrated on Sunday in the Catalan capital Barcelona, carrying banners saying “Catalonia is Spain” and “Together we are stronger”. Catalan leader Carles Puigdemont was due to address the regional parliament today on “the current political situation”.
Spain’s 10-year bond yield fell 6.4 basis points at 1.65 per cent.
On their first day of trade after a week-long holiday, Chinese blue-chip stocks touched their highest levels since late 2015, partly in a delayed reaction to a targeted cut in the amount of cash some banks must hold in reserve announced a week ago.
The index yesterday closed up 1.2 per cent.
Last week’s targeted rate cut outweighed data yesterday, showing activity in China’s service sector grew in September at its slowest since December 2015.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.1 per cent, having rebounded by 1.7 per cent last week. An index of world stocks tracking shares in 46 countries, however, was up less than 0.1 per cent but just shy of a record high.
Meanwhile, the dollar fell 0.1 per cent against a basket of currencies. The greenback was all but flat against the Japanese yen on concerns that North Korea was preparing a new missile test.
The yen was last at 112.69 per dollar, having fallen as low as 113.44 per dollar last week.
The euro edged up 0.1 per cent to $1.1742.
The Turkish lira fell as much as 2.5 per cent against the dollar and Istanbul stocks fell four per cent after the United States and Turkey cut back visa services in a sharp deterioration in relations.
The lira last traded at 3.7060 per dollar, down 2.5 per cent on the day, and stocks were down 3.1 per cent.
Sterling rose 0.9 per cent to $1.3173 on reports that British Prime Minister Theresa May, facing threats to oust her, might sack her foreign minister, Boris Johnson.
Speculative investors’ bets on a stronger pound reached their highest in three years in the week to October 3, data from the Commodity Futures Trading Commission showed.