Global stocks rally as China eases travel restrictions

BLOOMBERG

Global stocks advanced, with France’s equity benchmark jumping 1%, after China lifted travel curbs. European travel and luxury companies led gains in the Stoxx 600 Index on speculation that companies will benefit an increase in Chinese tourism spending. The mood in markets was positive ahead of the key US inflation data, which may provide clues on the Federal Reserve’s next steps. The dollar weakened and S&P 500 futures added 0.6%.
Treasuries were steady, with the 10-year yield holding just above 4%. The last big US bond sale of the week will take place later with the sale of 30-year notes. Despite all the concerns recently that the auctions would face investor resistance, demand for the debt has so far been strong.
The US reading on consumer prices will be critical for investors trying to determine whether the Fed will stop raising interest rates.  The report is expected to show a second straight reading for so-called core inflation that is consistent with the Fed’s 2% target on an annualised basis, according to a preview from Bloomberg Economics.  The consumer price index, excluding food and energy, probably rose 0.2% last month, following a similar increase in June, they said.
“A higher-than-expected number would produce some short-term equity and bond volatility,” said Andrew Bell, chief executive officer at Witan Investment Trust.
“But I doubt it would change expectations for the peak in Fed rates as there is a weight of evidence pointing to the economy disinflating.”
Among individual stocks in Europe, luxury was the standout. LVMH and Hermes International added 2%.  China’s Ministry of Culture and Tourism said it would lift a group travel ban to countries including the US, UK, Australia, South Korea and Japan.
Buyers from China account for about 25% of European luxury-goods sales, including purchases made by tourists, according to latest estimates from Goldman Sachs Group Inc.
In the US, Walt Disney Co shares rose 1.3% in premarket trading after saying capital spending and outlays for movies and TV shows are coming in lower than projected.