European markets closed higher Monday after a weekend of strong economic data from China but ahead of fresh inflation readings, with Paris setting new records while US equities edged lower.
France’s CAC 40 index reached new all-time and closing highs, topping out at 7,136.13 points intraday before closing slightly lower thanks to a strong earnings season.
“In this environment, shares remain a profitable asset for investors” given historic-low real interest rates (accounting for inflation), said Florence Barjou of Lyxor AM.
The picture was less exuberant in London and Frankfurt, although both were still in the green, while across the Atlantic, major Wall Street indices fell modestly following a choppy session.
US inflation is tracking higher and earnings from major retailers should give a reading on the motor of the world’s largest economy later in the week.
The US government will release its October retail sales report on Tuesday, which is usually closely scrutinized given its proximity to the festive season. But investors are especially edgy given worries about consumer prices and supply chain problems.
“Given the surge in inflationary pressures and the drop in consumer sentiment, there is greater risk of a negative surprise than a positive one,” ThinkMarkets analyst Fawad Razaqzada said.
Asian equity markets had mostly enjoyed gains Monday after another healthy pre-weekend showing on Wall Street.
US President Joe Biden and China’s Xi Jinping will meanwhile speak Monday at a virtual summit aimed at defusing some of the tensions that have built up over Taiwan and other flashpoint issues, but with both sides signalling little appetite for compromise.
The meeting, initiated by Biden, will take place Monday at 7:45 pm (0045 GMT Tuesday), which in Beijing is 8:45 am Tuesday, according to a senior Biden administration official.
Inflation and supply chains
While optimism about the global economic recovery remains intact, the rise in prices at rates not seen for decades has traders increasingly worried that central banks will have to tighten monetary policy quicker and more sharply than previously thought.
Data out of the United States last week showing consumer sentiment at a 10-year low indicated that the issue is being felt more in people’s pockets, putting pressure on the Federal Reserve to step in.
However, for now officials are sticking to their view that the inflation spike will be temporary and peter out as supply chain problems are resolved.
Tokyo’s stock market enjoyed a strong showing Monday, shrugging off news that the Japanese economy contracted more than forecast in the third quarter.
A new stock exchange focused on smaller-scale firms meanwhile began trading in Beijing on Monday, as China cracks down on domestic tech giants.
Key figures around 2140 GMT
New York – Dow: DOWN less than 0.1 percent at 36,087.45 (close)
New York – S&P 500: FLAT at 4,682.80 (close)
New York – Nasdaq: DOWN less than 0.1 percent at 15,853.85 (close)
London – FTSE 100: UP 0.1 percent at 7,351.86 (close)
Frankfurt – DAX: UP 0.3 percent at 16,148.64 (close)
Paris – CAC 40: UP 0.5 percent at 7,128.63 (close)
EURO STOXX 50: UP 0.4 percent at 4,386.19 (close)
Tokyo – Nikkei 225: UP 0.6 percent at 29,776.80 (close)
Hong Kong – Hang Seng Index: UP 0.3 percent at 25,390.91 (close)
Shanghai – Composite: DOWN 0.2 percent at 3,533.30 (close)
Euro/dollar: DOWN at $1.1373 from $1.1445 on Friday at 2200 GMT
Pound/dollar: FLAT at $1.3414
Euro/pound: DOWN at 84.76 pence from 85.32 pence
Dollar/yen: UP at 114.12 yen from 113.89 yen
Brent North Sea crude: DOWN 0.1 percent at $82.05 per barrel
West Texas Intermediate: UP 0.1 percent at $80.88 per barrel
burs-jmb/cs
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