Stocks rise as investor optimism over China’s COVID weakens dollar According to Reuters

Stocks rise as investor optimism over China’s COVID weakens dollar According to Reuters

Stocks rise as investor optimism over China’s COVID weakens dollar According to Reuters

© Reuters. People walk past an electronic screen showing the Japanese Nikkei stock price index in Tokyo, Japan, June 14, 2022.

By Amanda Cooper

LONDON (Reuters) – Global stocks rose on Monday despite Beijing’s denial that it would consider easing its zero-tolerance COVID-19 policy, which diverted investor flows away from the dollar ahead of potentially key consumer inflation data this week.

Risky assets jumped on Friday on speculation that China was preparing to ease its pandemic restrictions, but over the weekend health officials reiterated their commitment to a “dynamic cleanup” approach to COVID cases as soon as they emerge.

“We can question whether there is any truth to the China story, but the market is very happy to give it credence at the moment, despite the big rejections,” said Jeremy Stret, head of G10 currency strategy at CIBC Capital Markets.

The dollar fell under pressure for a second day as traders held on to the idea that China may ease some of its restrictions after the government announced on Monday that it would make it easier for people to get in and out of the capital.

The dollar fell against other major currencies, with the pound lifting 0.8% to $1.1457 and the euro up 0.2% to near parity at $0.9980.

and Nasdaq futures rose 0.2% and 0.3%, respectively.

The biggest macroeconomic risk event this week will be the October US Consumer Price Index (CPI), which could affect investor expectations about the likely course of the Federal Reserve’s monetary policy.

Fed Chairman Jerome Powell last week quashed speculation that the central bank might slow the pace of its rate hikes, saying rates were likely to stay higher for longer.

Friday’s October employment report showed much faster-than-expected job growth but slower wage growth and an increase in the unemployment rate, suggesting some tightness in the labor market may be easing.

MEDIUM FORECASTS

Average forecasts for Thursday are for annual inflation to slow to 8.0% and core to fall to 6.5%.

“If we can see a moderation in core CPI, which I think might suggest that a little bit, but I think if we see that, that will encourage this correction to go a little bit further,” said CIBC’s Stretch. the

Speculation that China, the world’s biggest crude consumer, could open its economy rose 7% on Friday in its biggest one-day rally since 2009, while oil rose more than 4%.[MET/L] [O/R]

Four Federal Reserve policymakers indicated on Friday that they would consider a smaller rate hike at their next policy meeting, less aggressive than Chairman Jerome Powell.

At least seven Fed officials are due to speak this week, helping to improve the rate outlook with markets now narrowly leaning toward a half-point rate hike next month to 4.25-4.5%.

“I don’t think the market will do much ahead of the U.S. inflation data,” said Massimiliano Maxia, senior fixed income strategist at Allianz ( ETR: ) Global Investors.

“Markets expect a (Fed) rate hike of 50 bps in December and 25 bps early next year, but they are willing to change their view very quickly if the consumer price numbers rise sharply,” he added.

Two-year Treasury yields, which are most sensitive to inflation and interest rate expectations, were last up 6 basis points intraday at 4.711% from Friday’s 2007 peak.

Also of note will be Tuesday’s US midterm elections, where Republicans could gain control of one or both chambers and lead to a stalemate on fiscal policy.

Meanwhile, oil eased, giving back some of last week’s gains. fell 0.7% to $97.96 per barrel and also to $91.91 per barrel.



#Stocks #rise #investor #optimism #Chinas #COVID #weakens #dollar #Reuters

Leave a Comment

Your email address will not be published. Required fields are marked *