European shares surged after Chinese stocks were set for their strongest week since 2008, driven by Beijing’s efforts to revitalize the world’s second-largest economy.
The UK’s FTSE 100 climbed 0.1%, while France’s Cac 40, Germany’s DAX, and Italy’s FTSE MIB were all poised for gains following China’s decision to lower the reserve requirements for banks, releasing approximately £106.6 billion in liquidity into the financial market.
This move by the People’s Bank of China came just a day after President Xi Jinping and other top officials acknowledged “new problems” within the economy and outlined plans to get it back on track.
Both Chinese and Hong Kong stocks rallied in response, positioning them for their best weekly performances in 16 years. The CSI 300 index and the benchmark Shanghai Composite have recorded gains of 15% and 12%, respectively, for the week, while Hong Kong’s Hang Seng index has risen nearly 13%.
Barclays analysts noted, “At face value, all measures announced this week indicate that the urgency of policy response is not lost on authorities—an important shift in a market that was seeking more than just the bare minimum.
“However, in a scenario that could have broader implications for global assets, this week may signify that China is aiming to structurally repair its national balance sheet.”
