Wall Street opens higher; oil hit by China demand concerns

European shares rose and US stock index futures pointed to a stronger open for Wall Street on Monday with risk appetite boosted by a US infrastructure bill, though oil prices were hit by concerns about Chinese demand.

The MSCI world equity index (.MIWD00000PUS), which tracks shares in 49 countries, was up 0.4 per cent at 1114 GMT, after Asian shares recouped some of their recent losses.

MSCI’s main European Index (.MSER) rose around 0.3 per cent, while the Stoxx 600 hit a new all-time high in early trading, before gradually easing, last up 0.3 per cent (.STOXX).

Manufacturing activity across the euro zone continued to expand at a blistering pace in July as the reopening of the economy led to rocketing demand, but supply bottlenecks sent input costs soaring.

The Purchasing Managers’ Index (PMI) survey came after official data on Friday showed the bloc’s economy grew faster than expected in the second quarter. read more

George Buckley, chief UK and euro area economist at Nomura said he expects economic activity to remain strong but that a key question among clients is when the rate of growth will slow.

“It’s likely in my view that we will see a very sharp fall-off in the PMIs not because we are looking at a much weaker outlook but...the low-hanging fruit has now been picked.”

Risk appetite was also boosted by the prospect of more fiscal stimulus in the United States, as senators introduced a sweeping $1 trillion infrastructure spending plan. read more

Wall Street futures rose, with S&P 500 e-minis up 0.4 per cent and Dow e-minis up 0.2 per cent.

Earlier in the session, Chinese stocks rebounded after a sell-off caused by Beijing’s regulatory crackdown.

China’s Communist Party’s top decision-making body said on Friday that China will stick with its current economic policies in the second half of the year.

“We think the regulatory changes will continue and the direction is unlikely to be reversed, though the pace could be adjusted,” wrote JP Morgan strategists in a note to clients.

Oil prices were down after a survey found that China’s factory activity growth slipped sharply in July as demand contracted for the first time in over a year, prompting concerns about demand in the world’s second-largest oil consumer.

At 1122 GMT, Brent crude oil futures were down 1.3 per cent and US West Texas Intermediate (WTI) crude futures were down 1.5 per cent on the day.