Stock Markets Rise as China Unveils Plan to Boost Consumer Spending

European and Asian stock markets rose as China announced a consumer plan to stimulate spending, amidst U.S. tariff concerns. The plan aims to enhance income and stabilize the economy post-COVID. Key economic indicators reflect mixed signals such as deflation in consumer prices. Ongoing geopolitical tensions complicate the landscape.

European and Asian stock markets began the week positively, buoyed by China’s announcement of a consumer plan aimed at boosting spending amid concerns over U.S. tariffs. This surge followed a rally on Wall Street, driven by optimism regarding U.S. lawmakers’ efforts to pass a spending bill to prevent a government shutdown. Susannah Streeter, the head of money and markets at Hargreaves Lansdown, noted, “Hopes that a new consumer life raft in China will buoy up the country’s prospects of recovery have helped lift sentiment slightly, but caution remains.”

Investors turned their attention to Beijing, where officials planned to unveil initiatives intended to stimulate consumer spending following a period of post-COVID economic fragility. The strategy includes income enhancement through property reforms, stock market stabilization, and encouraging lenders to provide reasonable consumption loans. Additional measures may involve increasing pension benefits, instituting a childcare subsidy system, and safeguarding workers’ rights regarding rest and holidays.

This consumer-focused plan emerges amidst reports indicating that consumer prices in China fell into deflation in February for the first time in a year, with producer prices continuing their decline. Economists from Moody’s Analytics cautioned that with the ongoing U.S.-China trade tensions initiated by President Donald Trump, the situation poses significant challenges: “With China firmly in US President Donald Trump’s sights, deflation concerns in China will worsen. The chaos of tariffs and rising unemployment will keep consumer spending weak, denting inflation’s demand drivers.”

Throughout Monday, major European indices showed upward trends, with London, Paris, and Frankfurt reflecting gains from their Asian counterparts. Notably, Hong Kong continued its strong performance driven by investments in Chinese technology firms. Traders are also strategically anticipating policy decisions from central banks this week, including the Federal Reserve, Bank of Japan, and Bank of England, all of which are likely to maintain current interest rate levels.

In financial commodities, gold traded around the $3,000 mark, marking its first breach of this threshold on the previous Friday due to heightened demand for safe-haven assets amid tariff anxieties. Key stock indexes as of 1100 GMT include a 0.2 percent rise in London’s FTSE 100, a 0.4 percent increase in Paris’s CAC 40, and a 0.4 percent gain for Frankfurt’s DAX. Oil prices also climbed, with Brent North Sea Crude up 1.2 percent and West Texas Intermediate rising by 1.3 percent.

In summary, the stock markets are experiencing upward momentum thanks to China’s consumer plan aimed at stimulating spending. Despite existing challenges posed by U.S. tariffs and economic conditions, investor sentiment shows cautiously optimistic signs. Central banks’ policy decisions this week will be closely monitored, as they may further influence market dynamics. Overall, while opportunities for recovery appear, a degree of caution remains prevalent.

Original Source: www.news-graphic.com