Hong Kong stocks rallied on hopes that China is to discuss moving away from its zero-Covid strategy
Global stock markets were mixed Tuesday as traders looked ahead to the US Federal Reserve’s next interest rate decision hoping it will signal a more dovish approach to fighting inflation.
Early gains in US equities soon turned to red following mixed data that sparked anxiety that the Fed might disappoint investors.
Markets were particularly unnerved by Labor Department figures showing a surge in open positions in September, surprising investors who have been expecting the jobs market to slow.
“The economy can’t be slowing down that fast if companies are still struggling to fill job openings,” said Oanda’s Edward Moya. “The Fed downshift trade could blow up if the labor market refuses to break.”
The US central bank is widely expected Wednesday to announce a fourth straight 75-basis-point rate hike as it tries to rein in rising prices — but recent signals have suggested officials are looking to dial down the pace of increases.
Hopes that the Fed could pivot to a less hawkish stance in the coming months have sparked a rally in risk assets over the past week — helped by signs that other central banks are also trying to take a step back.
The main European indices pared back on earlier gains through afternoon trading, but still closed in the green.
London was up 1.3 percent, Paris 1.0 percent, and Frankfurt gained 0.6 percent.
– Waiting game –
“The waiting game for the Fed is still on, with investors largely in the dark until the US central bank illuminates the path ahead for interest rate rises tomorrow,” said Hargreaves Lansdown analyst Susannah Streeter.
In Asia, Hong Kong led the rally following unconfirmed posts on Chinese social media saying officials were putting together a committee to discuss how to move the country away from its economically damaging zero-Covid policy.
Shares jumped more than five percent after the appearance of the unverified document, which ramped up hopes that the world’s number two economy could begin opening up in the new year and ease the strict containment measures that have hammered productivity and markets.
Oil prices also gained on speculation of a gradual easing of the zero-Covid policy in China, a major consumer.
However, neither Chinese state media nor government officials have suggested the meeting actually took place, or that such a committee was established, raising questions about the statement’s veracity.
Nonetheless, Shanghai climbed more than two percent, while the yuan also rallied after recently falling to record lows against the dollar.
– Big earnings season –
Meanwhile positive results from multinational firms also helped lift equities.
Shares climbed in London-listed oil giant BP after it reported that third-quarter profit had more than doubled on high commodity prices, to $8.2 billion.
It is the latest energy group to report bumper earnings in recent weeks after Chevron, Shell and TotalEnergies.
Also reporting Tuesday was US drugmaker Pfizer, which recorded an 83 percent surge in Covid-19 vaccine revenues in the United States in the most recent quarter.
Ride-hailing group Uber saw shares rocket after it reported a 72 percent surge in quarterly revenues.
And shares in British grocery delivery platform Ocado soared more than 35 percent at one point after it announced a tie-up with South Korean conglomerate Lotte Shopping.
– Key figures around 2100 GMT –
New York – Dow: DOWN 0.24 percent at 32,653.20 (close)
New York – S&P 500: DOWN 0.4 percent at 3,856.10 (close)
New York – Nasdaq: DOWN 0.9 percent at 10,890.85 (close)
London – FTSE 100: UP 1.3 percent at 7,186.16 (close)
Frankfurt – DAX: UP 0.6 percent at 13,338.74 (close)
Paris – CAC 40: UP 1.0 percent at 6,328.25 (close)
EURO STOXX 50: UP 0.9 percent at 3,651.02 (close)
Tokyo – Nikkei 225: UP 0.3 percent at 27,678.92 (close)
Hong Kong – Hang Seng Index: UP 5.2 percent at 15,455.27 (close)
Shanghai – Composite: UP 2.6 percent at 2,969.20 (close)
Euro/dollar: UP at $0.9883 from $0.9882 on Monday
Pound/dollar: UP at $1.1486 from $1.1469
Dollar/yen: DOWN at 148.23 yen from 148.71 yen
Euro/pound: DOWN at 85.96 pence from 86.16 pence
West Texas Intermediate: UP 2.1 percent at $88.37 per barrel
Brent North Sea crude: UP 2.0 percent at $94.65 per barrel
burs-jmb/dw
