European carmakers on the rise

"The circa 2% gain for the Nikkei 225 came amid claims from BoJ Governor Ueda that the government's economic stimulus plans will positively impact economic growth, although it would also have inflationary effects. As such, the BoJ stand ready to raise rates this month, with the Government seemingly willing to tolerate the move. With Japanese 30-year bonds on the rise following a strong 10-year auction, stocks in the region are pushing higher after recent jitters."

"This comes off the back of the news that Donald Trump could seek to reduce fuel economy standards implemented by Joe Biden, aiming at making it easier for automakers to sell fossil fuel cars. While this is a move aimed at lowering costs for US consumers, it also provides a shot in the arm for European carmakers that have struggled to dominate the EV space given rampant Chinese competition."

European markets opened higher following a strong Asian session led by a roughly 2% Nikkei gain tied to BoJ and government stimulus commentary. The Bank of Japan is prepared to raise rates this month, with the government appearing willing to tolerate higher inflation, while long-dated Japanese yields rose after a solid 10-year auction. European automakers outperformed as reports that fuel economy standards might be loosened in the US would ease sales of fossil-fuel vehicles and benefit firms challenged in the EV market by Chinese competition. The US dollar fell to a one-month low amid increased odds of a Fed cut after weak ADP payrolls concentrated in small businesses, and market attention on a potential Kevin Hassett Fed chair has raised questions about policy independence and helped steepen the yield curve.

Read at London Business News | Londonlovesbusiness.com