Stock markets around the world shrugged off weak economic data and losses from last week as China’s yuan was fixed at a stronger rate and crude oil prices held on to Friday’s gains. The strong European opening was followed by a surge in Japanese market as weaker-than-expected gross domestic product (GDP) data raised speculation the government would boost economic stimulus.
Battered by its worst week in seven years, Japan’s stocks gained after official data released Monday showed that the country’s GDP had shrunk 1.4 percent in the fourth quarter, more than analysts' expectations. The contraction may pressure the Bank of Japan to further weaken the yen to help strengthen the export-oriented economy.
European stock markets rebounded sharply from last week’s losses, as banking stocks rose along with French telecom stocks Monday. Shares in France’s CAC 40 rose 3.41 percent, while Germany’s DAX was up 3.08 percent. London’s FTSE 100 was up 2.25 percent while the pan-European Stoxx 600 was up 3.16 percent.
"It's no surprise to see markets rebounding after excessive movements seen in the last few weeks," Riccardo Ambrosetti, chairman of Italy's Ambrosetti Asset Management, told Reuters. "European equities have been particularly hit and we expect a faster recovery for battered financial stocks."
In Asia, all major financial bourses closed higher except China’s stocks markets, which declined Monday as investors returned from a weeklong national break celebrating the start of the Lunar New Year in China. The yuan traded about 1.35 percent higher — its biggest gain since 2005 when the currency’s dollar peg ended, the Wall Street Journal reported, adding the yuan gained to as much as 6.4880 against the dollar.
Japan's benchmark Nikkei 225 Index led the region, surging more than 7 percent while Hong Kong’s Hang Seng Index closed 3.27 percent higher. India’s S&P BSE Sensex rose 2.47 percent and South Korea’s Kospi index rose 1.47 percent Monday.
In China, the Shanghai Composite Index recovered from a 2 percent loss Monday morning to close 0.59 percent lower. The CSI 300 Index of the largest listed companies in Shanghai and Shenzhen fell 0.58 percent. Bucking the trend, China’s Nasdaq-style ChiNext index rose 0.95 percent.
In the United States, Dow Jones futures, S&P 500 futures and Nasdaq futures all gained more than 1 percent. U.S. markets will be closed for Presidents Day Monday.