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Highlights:
- European stocks rise: Stoxx 600 edges closer to record high amid optimism over Chinese stimulus.
- Chinese central bank cuts rates: Measures aim to support China’s economy and boost consumer confidence.
- Moncler and LVMH partnership: Luxury sector sees gains as Moncler collaborates with LVMH, lifting related stocks.
European stocks rose in early trading on Friday, with the pan-European Stoxx 600 index gaining 0.18% to reach 526.56 points, just shy of its all-time high of 526.66. The gains were driven by positive sentiment following strong performances in Asia and the US overnight, spurred by renewed stimulus measures from China aimed at propping up its economy.
The Chinese central bank cut interest rates and infused fresh liquidity into the financial system, as policymakers move aggressively to push the country back towards its 5% growth target for 2024. The move is part of a broader fiscal package, with Beijing reportedly planning to issue special sovereign bonds worth about 2 trillion yuan, marking the largest such measure since the Covid-19 pandemic.
Investors are also focused on upcoming economic data from Europe and the US, including German unemployment, eurozone sentiment indicators, and the highly anticipated Core Personal Consumption Expenditure (PCE) inflation data from the US. Analysts are projecting a moderate monthly rise between 0.1% and 0.2% for August, but a higher-than-expected figure could dampen expectations for further rate cuts by the Federal Reserve.
Brent Crude continued its downward trend, falling to $71.45 per barrel, amid speculation that Saudi Arabia may have dropped its $100 price target. The oil market has been under pressure as traders assess the potential impact of increased production later this year.
Corporate Developments
Shares in luxury goods maker Moncler surged after a strategic partnership was announced between its CEO, Remo Ruffini, and French luxury conglomerate LVMH. The collaboration will see LVMH secure a seat on Moncler’s board, signaling further consolidation in the high-end fashion sector. LVMH shares also rose, while other luxury names like Kering, Hugo Boss, and Brunello Cucinelli posted gains, buoyed by expectations that Chinese stimulus will boost consumer demand.
Elsewhere, Prudential (LON:PRU) saw its stock rise following news of its strategic expansion in Southeast Asia. The insurance and financial services group announced a partnership with Bank Syariah Indonesia, broadening its footprint in the region as it continues to explore growth opportunities in emerging markets.
Looking ahead, market participants will be watching closely for the impact of these developments on European stocks, as well as for any shifts in macroeconomic data that could influence central bank policy on both sides of the Atlantic.
