World shares mostly higher after China cuts key rate

BANGKOK: World shares were mostly higher early on Monday after China's central bank cut a key interest rate and Japan reported its economy picked up momentum in the last quarter.

US futures edged lower and oil prices fell more than USD 2. Paris, Frankfurt, Tokyo, and Sydney advanced while Hong Kong and Shanghai fell.

The People's Bank of China cut its rate on a one-year loan to 2.75 percent from 2.85 percent and injected an extra 400 billion yuan (USD 60 billion) into lending markets after government data showed July factory output and retail sales weakened.

Beijing is aiming to shore up sagging growth in the world's second-largest economy at a politically sensitive time when President Xi Jinping is believed to be trying to extend his hold on power.

The ruling Communist Party effectively acknowledged last month it can't hit this year's official 5.5 percent growth target after anti-virus curbs disrupted trade, manufacturing, and consumer spending.

A crackdown on a corporate debt has caused activity in the vast real estate industry to plunge.

In early European trading, Germany's DAX edged up 0.1 percent to 13,813.54 and the CAC 40 in Paris added 0.3 percent to 6,574.58.

Britain's FTSE 100 gained 0.2 percent to 7,513.09. The future for the S and P 500 lost 0.4 percent and that for the Dow industrials was down 0.3 percent.

In Asia, Tokyo's Nikkei 225 index rose 1.1 percent to 28,871.78 after the government reported the economy, the world's third largest, expanded at a 2.2 percent rate in April-June from a year earlier, as consumer spending rebounded with the lifting of COVID-19 restrictions.

In Sydney, the S and P/ASX 200 climbed 0.4% to 7,062.50. The Shanghai Composite index edged less than 0.1% lower to 3,276.09, while Hong Kong's Hang Seng index gave up 0.4% to 20,040.86.

South Korean markets were closed for a holiday.

Bangkok's SET index rose 0.2% after the Thai government reported the economy expanded at a 0.7% quarterly pace in April-June, slowing from 1.1% growth in the first quarter of the year.

Tourism has rebounded after two years of tight controls to fight COVID-19, but only to about a quarter of the pre-pandemic level.

"The outlook for the rest of the year will depend in large part on how quickly tourism recovers,'' Gareth Leather of Capital Economics said in a commentary.

On Friday, Wall Street capped a choppy week of trading with a broad rally, as the S&P 500 notched its fourth consecutive weekly gain.

The benchmark index closed 1.7% higher for a 3.3% weekly gain. The S&P 500 hadn't posted such a good stretch since November.

The Dow Jones Industrial Average rose 1.3%, while the Nasdaq gained 2.1%. The Russell 2000 index of smaller companies added 2.1%.

Major indexes got a big bump on Wednesday after a report showed that inflation cooled more than expected last month. Another report on Thursday showed inflation at the wholesale level also slowed more than expected.

They raised hopes among investors that inflation may be close to a peak and that the Federal Reserve could ease off on interest rate hikes, its main tool for fighting inflation.

The aggressive pace of rate hikes has investors worried that the Fed could steer the economy into a recession.

This week, the Commerce Department releases its retail sales report for July and retail giant Walmart reports its latest financial results.

Investors can also assess the health of the housing market when they get a report on home sales for July and the latest earnings from Home Depot.

In another trading Monday, U.S. benchmark crude oil shed $2.09 to $90.00 per barrel in electronic trading on the New York Mercantile Exchange. It lost $2.25 per barrel on Friday.

Brent crude oil, the basis for pricing for international trading, gave up $2.14 to $96.01 per barrel.

The U.S. dollar slipped to 133.41 Japanese yen from 133.43 yen. The euro weakened to $1.0212 from $1.0261.