China’s economy is expected to benefit global markets
The Chinese economy is expected to grow as COVID-19 restrictions are relaxed, which led to a rise in global stocks on Friday. However, stocks were on track to lose 2% of their value for the week as nervous markets braced for the Federal Reserve’s policy meeting next week.
European equities were unchanged, while U.S. S&P futures rose by 0.18%.
A day after a top-level party meeting committed to concentrating on stabilizing growth while maximizing epidemic efforts, China’s Premier Li Keqiang said in remarks broadcast by state media on Thursday that the country’s change in COVID-19 policy would help the economy to pick up speed.
While signaling a slower pace for future rate hikes, Fed policymakers are expected to reveal a 50 basis point increase in the lending rate when they meet next week.
Giles Coghlan, chief currency analyst at HYCM, stated that the market was “very much concerned with what the Fed is likely to accomplish on Wednesday; no one wants to take on any major positions,” while he added that Chinese stocks were aided by the fact that China had “made that COVID turn.”
The broadest MSCI index of Asia-Pacific stocks outside of Japan increased 1.2%, getting closer to a three-month high achieved earlier in the week. The MSCI world equity index increased by 0.22%.
The Nikkei in Japan increased 1.2%. Energy equities affected the British FTSE, which fell 0.2% to an 11-day low.
The Hang Seng index in Hong Kong increased by 2.3% to three-month peak levels, while mainland developers increased by a tremendous 9.9% to a four-month high. Chinese blue chips increased by 1% to reach their highest level in almost three months.
Following a year marred by the Ukraine crisis and skyrocketing inflation, which sparked one of the strongest monetary policy tightening cycles in recent memory, the world’s leading investment banks anticipate that global economic growth will drop even further in 2023.
By the end of the week, both the Bank of England and the European Central Bank plan to publish their interest rate decisions. In order to combat persistently high inflation, officials are continuing to apply the brakes to economic growth by raising interest rates.
Commodity prices increased, with iron ore prices rising 4.7% to their highest level in six months on expectations of stronger demand from China.
Oil prices were stable despite the disruption caused by the closure of a significant Canada-to-U.S. oil pipeline, but both benchmarks were headed for a weekly loss due to concerns over sluggish global market growth.
While Brent crude held stable at $76.09 per barrel, U.S. West Texas Crude oil futures saw a 0.1% decline to $71.43 per barrel.