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LONDON: Global stock markets cruised towards their best week since August on Friday, with sentiment underpinned by Donald Trump’s decisive US election victory, while China kicked off a fresh round of fiscal support for its flagging economy.
A day after the U.S. Federal Reserve delivered a quarter-point rate cut, as anticipated, focus turned back to the fallout of Tuesday’s U.S. election as well as headlines out of Beijing.
The offshore yuan weakened, while U.S.-listed shares of Chinese firms and China exposed-sectors in Europe fell in a sign of investor disappointment with China’s stimulus news.
U.S. stock futures ticked lower,, Europe’s STOXX index eased 0.7%, while Japan’s Nikkei closed 0.3% higher.
The modest moves masked what has been a generally strong week for stocks, led by Wall Street shares, as Trump’s election win stoked expectations of lighter regulation and tax cuts that could further boost the U.S. economy.
The S&P 500 stock index is up over 4% this week and set for its best week in over a year, while MSCI’s world stock index is set for its best week since August with a gain of just over 3% and stands just shy of record highs.
“What you are going to get because of the clean sweep – is a mandate to improve the U.S. economy. So, taxes will come down, bureaucracy will ease and regulation will become lighter,” said Guy Miller, chief markets strategist at Zurich Insurance Group.
“Between now and year-end, there is a tailwind for U.S. stocks. The U.S. market has potential.”
Elsewhere, Germany’s DAX stock index fell a day after posting its best daily performance of 2024 so far, helped by expectations that Germany could scrap its debt brake.
CHINA DISAPPOINTS
China unveiled a 10 trillion yuan ($1.40 trillion) debt package to ease local government financing strains and stabilise flagging economic growth.
Finance Minister Lan Foan said more stimulus was coming, with some analysts saying Beijing may not want to fire all its financial weapons before Trump takes over officially in January.
Mainland blue chips, which rose 3% on Thursday, fell 1% on Friday, as did Hong Kong’s Hang Seng, in a sign of some caution ahead of the announcement.
The offshore Chinese yuan was 0.3% softer at 7.1730 per dollar. China-exposed European luxury and mining stocks each fell over 3%.
“Unless there’s more to come later this evening, today’s fiscal announcement is another disappointment for those expecting substantial stimulus,” said Capital Economics chief Asia economist Mark Williams.
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