LONDON, Nov 29 (Reuters) – Shares and oil gained on Tuesday, rising on hopes that social unrest in China could lead to an earlier easing of COVID-19 restrictions in the world’s second-largest economy.
The yuan strengthened and the dollar fell as investor appetite for riskier assets increased.
Euro STOXX 600 (.STOXX) Recovering from its worst session in almost two weeks on Monday, it gained as much as 0.5% before giving up some of its gains.
Commodity related stocks in London (.FTSE) starred with the miners (.SXPP) and petroleum mags (.SXEP) It contributed to a 0.7% increase, outperforming indices in Paris (.FCHI) and Frankfurt (.GDAXI)🇧🇷
Hopes for faster easing China’s tough restrictions rose after an official said authorities would continue fine tuning policy Reducing the impact of “Zero COVID” on society.
Three years into the pandemic, simmering resentment over Beijing’s tough COVID-19 containment policies spilled over the weekend into wider protests in Chinese cities thousands of miles apart.
“China is the dominant story in the markets right now and the pattern of risk assets we saw overnight is what we would expect with better news,” said Hugh Gimber, global market strategist at JP Morgan Asset Management.
“Good news for the Chinese economy is good news for the global economy.”
MSCI world equity index (.MIWD00000PUS)S&P 500 futures, which track stocks in 47 countries, rose 0.3%, while Nasdaq futures rose 0.5%.
The sudden optimism about China was combined with talk of possible production cuts by OPEC+ to help prop up oil prices.
U.S. crude futures rose $1.53 overnight to $78.78 a barrel, the lowest this year, while Brent rose $1.83 to $85.12.
In a sign of risk appetite, the dollar fell 0.4% against a basket of currencies to 106.06 and the offshore yuan lost 0.9% to 7.1830, erasing all of Monday’s gains.
Eurozone government bond yields, meanwhile, fell wide It came below expectations after inflation in Spain and in Germany’s most populous state. The data gives hope that the worst of the bloc’s consumer price pressures will end soon.
Previously, MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) It increased by 2.5%.
Shares of Chinese property companies waved after the country’s securities regulator lifted a ban on equity refinancing for listed property firms. This has revived Chinese blue chips (.CSI300) almost 3%, the biggest one-day rally in a month after Monday’s sharp decline.
Hopes of eased COVID restrictions helped lower the value of insurance against exposure to Chinese debt after hitting a near three-week high on Monday amid a broader sell-off.
IT IS LONGER
Thomas Barkin, president of the Federal Reserve Bank of Richmond, became the latest official double speculation The US central bank will reverse course on interest rates relatively quickly next year.
The heightened tensions come ahead of Fed Chairman Jerome Powell’s speech on Wednesday, which is shaping up to be a major messaging event as markets brace for a turnaround in policy.
Analysts suspect they may be disappointed.
“We think he has confirmed a slower pace of growth at the December meeting, which is almost entirely priced in,” NatWest Markets analyst Jan Nevruzzi said. “But we also think the Fed will reiterate its intention to remain in restrictive territory next year.”
So does Christine Lagarde, president of the European Central Bank warned Inflation in the euro zone has not peaked and may rise further.
Tightening financial conditions and the prospect of a recession will be a toxic product by 2023, with the key regional indicator sliding towards October lows. A request from Reuters has been found.
The euro rose 0.3% to $1.0375, after hitting a five-month high of $1.0497 overnight.
Reporting by Tom Wilson in London and Wayne Cole in Sydney; Edited by Bradley Perrett, Kirsten Donovan, and Susan Fenton
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