Morning Bid: China stocks party resumes with an eye on Saturday

A look at the day ahead in European and global markets from Ankur Banerjee

Chinese stocks were back at it and surging on Thursday, shaking off the previous day's slump, with the focus on a Saturday press briefing that investors hope will shed more light on fiscal stimulus measures aimed at reviving China's economy.

European stocks might get a breather - especially China-related miners and luxury names that have taken a beating as scepticism around Chinese stimulus gains ground. Futures indicate European bourses are due for a slightly higher open.

Over in the Far East, investor sentiment got a shot in the arm early on Thursday as the People's Bank of China kicked off a 500 billion yuan facility to spur capital markets which nevertheless were volatile and jittery.

The blue-chip index was last up 3.5% after sliding 7% on Wednesday, its biggest one-day drop since the pandemic as investors looked for details around the stimulus and awaited fiscal moves to spur growth.

Hong Kong's Hang Seng was up 4% and in the space of two weeks has surged to be second best-performing major stock market in Asia this year with a gain of 25%, much of which has come since the stimulus was announced on Sept. 24.

All eyes though will be on a finance ministry press conference on Saturday that could reveal plans on fiscal stimulus.

In many ways, this is it, this is the moment markets and investors have been waiting for, especially after the central bank and other regulators in late September announced the most aggressive monetary stimulus measures since COVID-19 and steps to revive the debt-ridden property market.

Those measures whetted investor appetite, stoking expectations for large-scale fiscal moves in the near term. Analysts though are wary that if these lofty expectations are not met, there may yet be a steep pull back in stocks.

Beyond China, investor attention will be on U.S. inflation data due later in the day, with traders scaling back expectations of steep interest rate cuts from the Federal Reserve in the near term in the wake of blowout jobs data last week.

A hot report could knock back more of those rate cut expectations, analysts said.

U.S. dollar remained perched on a two-month high on the back of these shifting rate cut expectations.



Key developments that could influence markets on Thursday:

Economic events: Germany retail sales for July; U.S. inflation data for September

Source: Investing.com