Stocks rise as Wall Street starts week on steady footing

LONDON — World stock markets rose on Monday, with Wall Street starting the new month on a steady footing ahead of a raft of new economic data later this week, traders said.

"The stock markets started the new month on the front foot with European indices and US futures rising ahead of the open on Wall Street and a big week for central banks and data," said ThinkMarkets analyst Fawad Razaqzada.

Sentiment was firmer "as November looks like it will continue on the same train as in October", which saw the strongest monthly performance by stock markets so far this year, said Schwab analysts.

"The solid third-quarter earnings season confirmed the recent upturn and markets are watching out for changes in monetary policy," the analysts said.

Stock prices held steady in early trading on Wall Street, and sentiment was positive in Europe, where both London's FTSE and Frankfurt's DAX were up 0.7 per cent, while Paris' CAC index gained 0.8 per cent in mid-afternoon trading.

In Asia, the markets had ended the day in positive territory, with Tokyo leading the way as a win for Japan's ruling party in a weekend general election fuelled hopes it will push ahead with a fresh stimulus.

The yen neared a four-year low against the dollar with Japan seemingly not on course to tighten monetary policy in the short term, in contrast to the Federal Reserve (Fed) which this week could announce plans to begin tapering its pandemic-fuelled stimulus support.

Tokyo's main stocks index closed up 2.6 per cent after Prime Minister Fumio Kishida won a strong majority in the poll, giving him the freedom to push through a big spending programme to kick-start the stuttering economy.

Investors were looking ahead to the US Fed, which this week is expected to unveil a timetable for tapering its vast bond-buying stimulus programme.

A statement by Fed chief Jerome Powell following the monetary policy meeting will be closely followed for an idea about when the US central bank will start hiking interest rates.

News that inflation had hit a 30-year high in the United States and a 13-year peak in the eurozone added to long-running concerns that price rises are in danger of running out of control, and piled more pressure on central banks to tighten monetary policy.

"Given [the beginning of tapering] is well expected, more interest is likely to be in Chair Powell's press conference and whether this hints the Fed is becoming less comfortable with the inflation picture and whether they are starting to see the case for multiple hikes in 2022 as the market is pricing," said National Australia Bank's Rodrigo Catril.

The Bank of England is tipped to lift rates this week, following in the footsteps of other financial authorities in South Korea, New Zealand and Singapore, among others.

Hong Kong and Shanghai fell, however, after China released data showing factory activity contracted more than expected in October owing to a supply crunch, rising input costs and new lockdowns to fight another COVID outbreak.

The reading will add further pressure on Beijing to provide more support for the world's number two economy, but authorities have to tread a fine line as they battle to contain inflation.