Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
2018 has been a grim year for China’s investors, but perhaps things are finally looking up.
The Chinese stock market has surged by over 4% today, on track for its best day since 2015, after President Xi Jinping vowed “unwavering” support for the country’s private sector.
In a clear hint that Beijing will do more to protect China’s economy, Xi insisted that his government was standing behind its business leaders.
In a letter to private entrepreneurs, the Communist leader pledged:
“Any words and practices that negate and weaken the private economy are wrong.
Supporting the development of private enterprises is the Party Central Committee’s consistent policy.
Other Chinese officials have also been making supportive noises.
On Saturday, vice premier Liu He held a meeting with top officials to discuss financial stability in the face of the trade war with America. He later said that China must move faster to implement measures to encourage the healthy development of the economy.
These comments are seen as evidence that China could ease fiscal policy and cut taxes to support its economy, after seeing growth slow to its lowest rate in 10 years last week.
Chinese investors have leapt into action, driving the blue chip CSI300 index up by over 4.3% in late trading. The Shanghai Composite index is up 4%, on track for its best day since March 2016.
Other Asia-Pacific markets are also rallying, on hopes that a big Chinese stimulus package would support growth in the region.
Jasper Lawler of London Capital Group says:
Asian shares bounced higher on Monday, as Chinese stocks extended their rebound for a second straight session, pulling European futures higher in the process.
Beijing’s pledge of support for the economy is overshadowing geopolitical concerns over Saudi Arabia, Italy and Brexit.
Also coming up today
Italian stocks may be under pressure, after ratings agency Moody’s downgraded Italy’s credit rating on Friday night. On the upside, Moody’s left Italy with a ‘stable’ rating, meaning another downgrade isn’t imminent.
The move came as Rome prepares to see its 2019 Budget rejected by the European Union for breaching borrowing targets.
There’s not much in the economic calendar, but budget airline Ryanair and diamond producer Petra Diamonds are reporting results.