Stocks mostly higher as traders gauge China moves, wait for Fed’s Powell – Digital Journal

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Federal Reserve chief Jerome Powell’s speech later in the day will be closely watched by investors hoping for any insight into the bank’s policy plans – Copyright GETTY IMAGES NORTH AMERICA/AFP WIN MCNAMEE

Markets rose mainly on Wednesday on hopes China would further ease its strict covid containment measures following widespread political unrest, though gains were tempered by leaders’ warnings of a nationwide crackdown on dissent. .

Traders were also nervously awaiting a key policy speech from Federal Reserve chief Jerome Powell later in the day that could outline the bank’s strategy for tackling inflation in light of a recent slowdown in price gains.

A spectacular rally in Hong Kong on Tuesday sent gains across Asia as investors looked beyond the weekend rallies in China after officials announced measures aimed at softening their zero-covid strategy.

Leaders said they would step up their campaign to vaccinate the elderly, while the National Health Commission appeared to blame local governments for instituting extreme measures such as strict lockdowns, one of the main reasons for the unrest.

However, in a sign that the leaders were determined to maintain their authority, the country’s top security body called for a “crackdown” against “hostile forces.”

The warning came after security services were dispatched to prevent further demonstrations, the likes of which had not been seen in decades.

Events sent Hong Kong shares swinging between gains and losses in the morning, having risen more than 5 percent on Tuesday, while Shanghai fluctuated.

Data showing China’s factory activity contracted further in November highlighted the impact of Covid-zero on the country’s economy.

“Due to a more thoughtful approach to the recent zero-covid measures, Chinese stocks have made leaps and bounds this week,” said Stephen Innes of SPI Asset Management.

“Still, the global investment community is closely watching China… Any adversarial escalation risks reversing the current positive momentum, especially as people play the trade-off thinking a lull in the protests could hasten a move away from the policies from zero covid. .”

There were also gains in most other Asian markets, with Sydney, Seoul, Wellington, Taipei and Jakarta in the green, although Tokyo fell.

Attention is also focused on Fed chief Powell’s speech later Wednesday on the labor market, with many hoping it will outline the bank’s plans for future interest rate hikes.

After raising borrowing costs by 75 basis points over the past four meetings, officials are seen as taking their foot off the gas when they meet next month following a recent batch of weak data including below-average inflation. forecast for October.

But a series of policymakers have lined up in recent weeks to impose their intention to keep raising until they are satisfied that inflation has been eliminated, with caveats that there probably won’t be any cuts until 2024.

The sharp rise in rates this year has fueled bets that the world’s largest economy will slip into recession.

“The Fed has raised enough, and fast enough, to make recession a base case in our book,” said Lauren Goodwin of New York Life Investments.

“Volatility and risk premia are likely to remain elevated as the Fed battles inflation in a slowdown in growth.”

Powell’s comments come just before Friday’s release of US jobs data for November, which will provide the latest snapshot of the economy.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 0.6 percent to 27,858.16 (break)

Hong Kong – Hang Seng Index: UP 0.3 percent to 18,251.79

Shanghai Composite: UP 0.1 percent to 3,153.65

Euro/Dollar: UP to $1.0346 from $1.0332 on Tuesday

Dollar/yen: UP to 138.69 yen from 138.67 yen

Pound/Dollar: UP to $1.1977 from $1.1952

Euro/pound: DOWN to 86.38 pence from 86.42 pence

West Texas Intermediate: UP 0.8 percent to $78.81 a barrel

Brent North Sea crude: UP 1.0 percent to $83.88 a barrel

New York – Dow: FLAT at 33,852.53 (close)

London – FTSE 100: UP 0.5 percent to 7,512.00 (close)

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