Europe vaults higher as Asian stocks slide; bitcoin extends record rally

By Nell Mackenzie and Kevin Buckland

LONDON/TOKYO (Reuters) - European stocks rallied sharply on Monday (NASDAQ:MNDY ) ahead of a busy week, while Hong Kong stocks led declines in Asia after Beijing's latest stimulus fell short of investor expectations and bitcoin raced to another record high.

European shares climbed over 1%, with most sectors rising, kicking off a week packed with global economic data, including inflation readings in Germany and the United States.

The pan-European STOXX 600 added 1% as of 0959 GMT, with industrials among the top gainers, up 1.4%.

"We don't see a huge amount in future potential return from Europe," said Matt Tickle, chief investment officer at consultancy Barnett Waddingham.

He said their general investment outlook remained sceptical on European growth prospects, even with Monday's rally.

The euro slipped to its lowest since the end of June at $1.0679, last down 0.4% $1.0671, pushed down by reports that former U.S. Trade Representative Robert Lighthizer, known to be hawkish on tariffs, was to join the new Trump administration.

Reuters reported on Friday that Lighthizer had not yet been asked by Trump's new administration to join the role.

Trump's victory and pro-crypto candidates being voted to Congress has pushed bitcoin to a new all-time high, spurred on by expectations of a lighter regulatory environment.

The dollar traded not far from last week's four-month peak versus major peers as traders prepared for a key reading of U.S. consumer inflation this week, as well as a parade of Federal Reserve speakers, including Chair Jerome Powell on Thursday.

S&P 500 futures pointed 0.3% higher on Monday.

The Republican party is edging closer to sweeping both chambers of Congress, taking the Senate on election night and with Edison Research projecting it so far to have 214 seats of 218 needed for control of the House, compared to 205 for Democrats.

Investors expect Trump's second term in office will bring equities-boosting tax cuts and looser regulations.

Traders will be watching consumer price data on Wednesday for stickiness that could scupper the chances of an interest rate cut at the next meeting in December.

Markets currently lay about 65% odds for a quarter-point reduction on Dec. 18, according to CME Group's (NASDAQ:CME ) FedWatch Tool.

DIVERGING FORTUNES

Hong Kong shares slipped to a three-week low on Monday as China's local government debt-relief package fell short of investors' expectations for economic support, while a rally in semiconductor stocks pulled Chinese markets slightly higher.

China's blue-chip CSI300 Index closed 0.6% higher, led by a 6.8% jump in semiconductor stocks after Reuters reported the U.S. had ordered chipmaking giant TSMC to halt shipments of advanced chips to Chinese customers.

Investors figured that would encourage authorities to support China's industry and bought shares in local makers, sending Semiconductor Manufacturing International Corp stock up 4.7% to a record high.

Japan's Nikkei closed up 0.08% as gains were capped by domestic firms' dim outlook forecasts.

On Friday, after Chinese markets were closed, the National People's Congress Standing Committee unveiled a 10 trillion yuan ($1.39 trillion) debt package to ease local government financing strains and stabilise flagging economic growth.

However, the stimulus steps lacked the direct injection of money into the economy that some investors had hoped to see, particularly amid the threat of massive tariffs under the incoming Trump administration.

Gold declined 0.7% to $2,666.10 per ounce, dropping back further from last month's record high of $2,790.15.

Oil prices extended declines from Friday on the expectation that Trumps pro-drilling rhetoric will increase world supplies.



Brent futures dropped 71 cents to $73.16 a barrel, while U.S. WTI futures fell 83 cents to $69.55 a barrel.

($1 = 7.1787 Chinese yuan renminbi)

Source: Investing.com