Stocks, crude rise on hope China will ease strict Covid measures
Stocks and oil prices rebounded strongly Tuesday, while the haven dollar weakened, on speculation that China would further ease strict Covid measures but investors remain cautious ahead of key US data and speeches later in the week.
Sentiment was boosted also after China avoided another night of protests, following a weekend of unrest sparked by the tough anti-Covid policy that is weighing on growth in the world’s second biggest economy.
Stock market gains were led by big rallies in Hong Kong and Shanghai, with property firms enjoying a much-needed surge, also on moves to ease funding restrictions on troubled developers.
Europe’s main stock markets were mainly higher in late afternoon trading.
But sentiment was tempered by warnings from top Federal Reserve policymakers that US interest rates would climb further and could go higher than initially thought to fight decades-high inflation.
US stocks edged lower early Tuesday ahead of key releases on consumer health before the festive shopping season kicks off.
“Risk-on sentiment has lifted European equities, boosted by a rally overnight in China,” noted Victoria Scholar, head of investment at Interactive Investor.
Oil prices rebounded from 11-month lows, “boosted by improved sentiment towards demand from China”, she added.
Qatar announced Tuesday its first major deal to send liquefied natural gas to Germany as Europe scrambles to find alternatives to Russian energy sources.
Qatar’s Energy Minister Saad Sherida al-Kaabi said up to two million tons of gas a year would be sent for at least 15 years from 2026, and that state-run QatarEnergy was discussing other possible deals for Europe’s biggest economy.
German inflation also unexpectedly slowed in November to 10 percent from a record high of 10.4 percent in October, preliminary data showed Tuesday.
Economists however cautioned against assuming inflation was now on a downhill path as households will likely face higher energy costs from January.
Market focus was meanwhile turning to the United States, with a number of Fed officials due to speak, including boss Jerome Powell.
Noting that there has not been “any carryover momentum from the Chinese markets” on Wall Street Tuesday, Patrick J. O’Hare of Briefing.com said it “suggests to us that market participants are more attuned for the time being to happenings closer to home” including Powell’s speech Wednesday.
“Sure, the latest developments have helped temper some of yesterday’s selling activity, but they have not ignited buying efforts,” he added.
Friday sees the release of key US jobs data, which could provide an idea about the central bank’s plans for monetary policy.
Bets on a slowdown in its pace of rate hikes have boosted markets for the past weeks, but some high-ranking members on Monday looked to play down the chances of a more dovish pivot.
– Key figures around 1445 GMT –
London – FTSE 100: UP 0.6 percent at 7,522.52 points
Frankfurt – DAX: DOWN 0.1 percent at 14,361.21
Paris – CAC 40: UP 0.2 percent at 6,678.44
EURO STOXX 50: FLAT at 3,937.97
New York – Dow: DOWN 0.1 percent at 33,801.67
Tokyo – Nikkei 225: DOWN 0.6 percent at 28,027.84 (close)
Hong Kong – Hang Seng Index: UP 5.2 percent at 18,204.68 (close)
Shanghai – Composite: UP 2.3 percent at 3,149.75 (close)
Brent North Sea crude: UP 2.7 percent at $85.48 per barrel
West Texas Intermediate: UP 2.4 percent at $79.07 per barrel
Euro/dollar: DOWN at $1.0344 from $1.0347 on Monday
Dollar/yen: DOWN at 138.70 yen from 138.87 yen
Pound/dollar: UP at $1.1968 from $1.1952
Euro/pound: DOWN at 86.44 pence from 86.50 pence