Stocks Pare Weekly Loss on China Reopening Rally: Markets Wrap

(Bloomberg) — Global equities trimmed a weekly loss as Chinese shares surged amid signs that authorities are trying harder to ease the impact of its Covid-Zero policy.

Most Read from Bloomberg

Miners led gains in Europe as commodities rallied. Hong Kong’s benchmark Hang Seng Index was set for the biggest weekly jump since 2011 and US futures advanced, with tech-heavy Nasdaq 100 contracts up 0.4%.

Investors were heartened by news that US audit officials were ahead of schedule in on-site inspections of Chinese companies, and that a system penalizing airlines for bringing virus cases into the country may be scrapped.

Treasuries were little changed before US payrolls data hits in the American session. A key segment of the curve on Thursday reached an extreme of inversion not seen since the 1980s. Such curve inversions have a track record of preceding economic downturns.

Swaps that reference future Federal Reserve meetings indicate an expected peak policy rate above 5.14% around mid-2023.

The dollar weakened, while the offshore yuan advanced.

While similar Chinese stock rallies have all fizzled in recent months, bulls are now betting that some of the world’s lowest valuations have left the nation’s shares primed to surge on any hint of good news.

“What we are guessing is China in the future will model the reopening on the back of Hong Kong,” Jack Siu, Greater China chief investment officer at Credit Suisse Group AG, said on Bloomberg Television. “To fully reopen, we are still at least nine months away from today.”

Elsewhere, European gas and power prices jumped after Electricite de France SA issued yet another warning about its troubled nuclear fleet, adding to pressure on the region’s tight energy supplies this winter.

Story continues

Key events this week:

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.6% as of 8:02 a.m. London time

• Futures on the S&P 500 rose 0.3%

• Futures on the Nasdaq 100 rose 0.4%

• Futures on the Dow Jones Industrial Average rose 0.2%

• The MSCI Asia Pacific Index fell 1.6%

• The MSCI Emerging Markets Index fell 1.4%

Currencies

• The Bloomberg Dollar Spot Index fell 0.3%

• The euro rose 0.2% to $0.9771

• The Japanese yen rose 0.3% to 147.81 per dollar

• The offshore yuan rose 0.8% to 7.2734 per dollar

• The British pound rose 0.5% to $1.1212

Cryptocurrencies

• Bitcoin rose 1.9% to $20,617.4

• Ether rose 3% to $1,586.63

Bonds

• The yield on 10-year Treasuries was little changed at 4.15%

• Germany’s 10-year yield declined one basis point to 2.24%

• Britain’s 10-year yield declined one basis point to 3.51%

Commodities

• Brent crude rose 1.8% to $96.40 a barrel

• Spot gold rose 1% to $1,646.52 an ounce

–With assistance from Tommi Utoslahti.

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.