Global stock markets powered ahead Thursday as investors welcomed 2020 with a raft of strong gains after China’s central bank announced fresh stimulus, dealers said.
Asia kicked off the New Year on the front foot, with most rallying out of the blocks Thursday on lingering trade optimism and the stimulus news.
Europe also shone as investors remain upbeat about the global outlook after Washington and Beijing eventually reached a trade agreement to ease tensions between the two.
Brexit uncertainty has meanwhile been removed with Britain set to leave the European Union on January 31.
“European equities have made a bright start to the New Year with sizable rallies of more than one percent,” said XTB analyst David Cheetham.
“2019 was a good year on the whole for stock markets and they seem to be wasting little time in attempting to push higher again with the bourses following the lead of their Asian peers.
“Expectations that a ‘Phase One’ trade deal between the US and China will be signed in less than two weeks have boosted sentiment but the main driving force appears to be the announcement of a further easing of monetary policy from China’s central bank.”
However, geopolitical worries resurfaced following a warning from North Korean leader Kim Jong Un that moratoriums on nuclear and intercontinental ballistic missile tests had ended, with talks with the US going nowhere.
Shanghai and Hong Kong led gains after the People’s Bank of China said it would lower the amount of cash lenders must keep in reserve, freeing up more than $100 billion for loans to small businesses.
The move comes as leaders try to kickstart growth in the world’s number two economy, which is running at its weakest for almost three decades.
– Kim’s new warning –
Dealers were also being supported after Donald Trump said the mini China-US trade deal will be signed off in Washington on January 15, and he will later travel to Beijing for the next phase of talks.
The signing will smooth concerns that the pact could suffer a last-minute collapse, which has niggled some traders.
Seoul was down one percent after Kim Jong Un declared a self-imposed moratorium was no longer needed, raising the possibility that the North could soon resume missile launches or nuclear tests.
The announcement came after its end-of-year deadline for sanctions relief from the United States.
– Key figures around 1150 GMT –
London – FTSE 100: UP 1.0 percent at 7,615.54 points
Paris – CAC 40: UP 1.3 percent at 6,054.60
Frankfurt – DAX 30: UP 0.8 percent at 13,352.40
EURO STOXX 50: UP 1.2 percent at 3,789.34
Hong Kong – Hang Seng: UP 1.3 percent at 28,543.52 (close)
Shanghai – Composite: UP 1.2 percent at 3,085.20 (close)
Tokyo – Nikkei 225: Closed for a public holiday
New York – Dow: UP 0.3 percent at 28,538.24 (close)
Pound/dollar: DOWN at $1.3218 from $1.3257 at 2200 GMT
Euro/pound: UP at 84.79 pence from 84.58 pence
Euro/dollar: DOWN at $1.1205 from $1.1213
Dollar/yen: UP at 108.83 from 108.61 yen
Brent Crude: UP 0.5 percent at $66.35 per barrel
West Texas Intermediate: UP 0.3 percent at $61.24