European shares inch up on strong German data, stimulus hopes

Cornelia Mascio
Settembre 11, 2019

However, Germany's export-oriented DAX index turned positive, helped by a Reuters report that Bank of Japan policymakers are now more open to discussing the possibility of expanding stimulus at their September 18-19 board meeting due to the broadening fallout of the US-China trade war.

"People are positioned very bearish, but I don't think the market wants to be too bearish".

On Wall Street, stocks were lower, weighed down in part by technology shares as data from China showing producer prices had their sharpest pace of declines in three years in August renewed global recession worries. Australian shares .AXJO were down 0.71%.

The dollar index rose 0.09%, with the euro down 0.05% to $1.104.

The U.S. Federal Reserve is also widely expected to cut interest rates next week as policymakers race to shield the global economy from risks, which also include Britain's planned exit from the European Union.

"Bond yields had fallen so far so fast that they were due for a pullback, and you have some nerves setting in before the European Central Bank", said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors in Sydney.

Germany's 30-year benchmark bond yield DE30YT=RR briefly broke into positive territory for the first time since August 5, while U.S. Treasury yields US2YT=RR US10YT=RR US30YT=RR climbed to three-week highs.

While the bank is expected to ease monetary policy, Germany's plan to jump-start its own ailing economy by establishing independent public agencies offered the euro a temporary shot in the arm.

Europe's largest economy is teetering on the brink of recession, but strict national spending rules have tied policymakers hands on fiscal policy.

Benchmark U.S. 10-year notes US10YT=RR last fell 1 point in price to yield 1.7333%, from 1.622% late on Monday.

The Treasury yield curve US2US10=TWEB steepened on Tuesday as long-term yields traded above short-term yields in a sign of receding concern about the economic outlook.

Yields on 10-year Japanese government bonds JP10YTN=JBTC also rose to a four-week high of minus 0.220%.

The pound traded steady near a six-week high of $1.2385 after a law came into force demanding that Prime Minister Boris Johnson delay Britain's departure from the European Union unless he can strike a divorce deal with the bloc. Oil stocks .SXEP were the biggest boost to the index, tracking crude prices higher.

USA crude traded at $57.97 a barrel after hitting the highest since July 31. Saudi Arabia is OPEC's de facto leader.

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