Asian stocks extended their gains on Monday as investors hoped that steps to lift pandemic restrictions in China would finally brighten the outlook for global growth and commodity demand, and the dollar fell against the yuan.
The news helped oil prices as OPEC+ countries reiterated their production targets ahead of the European Union ban and Russian oil price hikes, which start on Monday. More Chinese cities announced the easing of coronavirus restrictions on Sunday as Beijing tries to make its zero-covid-19 policy less severe after unprecedented recent protests against the restrictions.
There were also reports that Beijing may be downgrading the risk classification for COVID-19. “Although the easing of some restrictions does not yet equate to a complete departure from the dynamic COVID-zero strategy, it is further evidence of a changing approach and financial markets seem to be firmly focused on the long-term outlook in the near term. because the virus cases look like they will continue, hit the activity,” said Taylor Nugent, an economist at NAB.
Chinese blue chips rose 1.1%, up from last week’s 2.5% rise. MSCI’s broadest index of Asia-Pacific shares outside Japan added 1.2%, after rising 3.7% last week to a three-month high. Japan’s Nikkei rose 0.2%, while South Korea’s rose 0.3%.
EUROSTOXX futures added 0.1%, while FTSE futures were flat. S&P 500 futures and Nasdaq futures both fell 0.1%. Wall Street had lost some momentum on Friday after a strong November US payrolls report tempered expectations for a less aggressive Federal Reserve, although Treasuries still ended last week with solid gains.
In fact, the yield on 10-year notes has fallen 74 basis points since early November, effectively wiping out much of the intensity of the Fed’s last hike in interest rates. Markets expect Fed rates to rise to 5% and the European Central Bank to around 2.5%.
Bruce Kasman, head of economic research, warns: “But US and European labor demand remains surprisingly strong, and with a recent easing in financial conditions, risks are moving towards higher-than-estimated terminal rates for The Fed and the ECB.” at JPMorgan. “The combination of labor market resistance with sticky wage inflation raises the risk that the Fed will deliver a higher than 5% rate forecast at its next meeting and that Chairman Jerome Powell’s press conference will convey a more open-ended stance toward any near-term deadline.” on values.”
READ THE DOLLAR The Fed meets on December 14th and the ECB the day after. Speaking on Sunday, French central bank chief Francois Villeroy de Galhau said he was in favor of a half point hike next week.
Central banks in Australia, Canada and India are all expected to raise rates at meetings this week. A sharp decline in US yields weighed on the dollar, which fell 1.4% against a basket of currencies last week to its lowest level since June.
It only lost 3.5% on the yen and last traded at 134.24, leaving the October peak of 151.94 a distant memory. The euro resumed gains at $1.0569, up 1.3% last week, the most since early July. The dollar also fell below 7.0 yuan in offshore trade and hit a three-month low of 6.9677.
The weaker dollar and yields were a boon for gold, which rose 0.5% in the quarter to $1,806 an ounce after rising 2.3% last week. Oil prices rose after OPEC+ agreed on its oil production targets at Sunday’s meeting.
The Group of Seven and European Union states are poised to impose a $60-a-barrel price cap on Russian offshore oil on Monday, although it was not yet clear what impact that would have on global supplies and prices. Brent rose $1.67 to $87.24 per barrel, US crude oil rose $1.46 to $81.44.
(This story has not been edited by Devdiscourse staff and is automatically generated from a combined feed.)