Chinese Business

European stock markets dropped Monday following losses in Asia, as investors looked ahead to interest rate decisions this week from major central banks including the Federal Reserve.

The dollar traded mixed against its main rivals, while oil prices retreated further following sharp falls last week.

Analysts are forecasting the Fed and the European Central Bank to announce smaller rate hikes at their meetings this week compared with recent decisions.

The Bank of England is meanwhile on course for a ninth increase in a row as policymakers try to bring down inflation from the highest levels in decades.

“Following a softer session in Asia, European markets are on edge, opening the week lower ahead of a critical few days for central bank action,” noted Victoria Scholar, head of investment at Interactive Investor. 

“The ECB, the Fed and the Bank of England are expected to raise rates by 50 basis points each as the pace of tightening looks set to slow.”

The half-point jumps will still be steep rises, however, as central banks struggle to cool the pace of price increases, particularly regarding energy and food.

Ahead of the Fed’s policy meeting, investors were set to digest US inflation data due Monday.

Traders were keeping an eye also on developments in China as it moves away from the zero-Covid policy that has hammered its economy, the world’s second largest after the United States.

The shift comes after widespread protests against the near three-year strategy, though there is concern about the expected spike in infections.

Uncertainty surrounding the strength of China’s demand recovery has hit oil prices hard, with crude futures shedding more than 10 percent last week.

“The gradual easing of Chinese Covid restrictions is… expected to lead to a further upswing in demand,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“However, concerns about the rapid spread of the virus remain, and China will have a tough fight on its hands, dealing with an expected explosion of infections while trying to open up the economy.”

– Key figures around 1200 GMT –

London – FTSE 100: DOWN 0.2 percent at 7,462.48 points

Frankfurt – DAX: DOWN 0.3 percent at 14,329.81

Paris – CAC 40: DOWN 0.3 percent at 6,659.99

EURO STOXX 50: DOWN 0.4 percent at 3,926.69

Tokyo – Nikkei 225: DOWN 0.2 percent at 27,842.33 (close)

Hong Kong – Hang Seng Index: DOWN 2.2 percent at 19,463.63 (close)

Shanghai – Composite: DOWN 0.9 percent at 3,179.04 (close)

New York – Dow: DOWN 0.9 percent at 33,476.46 (close)

Euro/dollar: UP at $1.0570 from $1.0534 on Friday

Dollar/yen: UP at 136.84 yen from 136.57 yen

Pound/dollar: UP at $1.2275 from $1.2262

Euro/pound: UP at 86.13 pence from 85.90 pence

West Texas Intermediate: DOWN 0.7 percent at $70.55 per barrel

Brent North Sea crude: DOWN 0.9 percent at $75.44 per barrel

Equity markets dropped and the dollar edged up Monday after a forecast-beating US inflation reading dampened hopes for a more dovish tilt by the Federal Reserve in its battle against soaring prices.

The producer price index reading for November followed data showing the jobs market remained tight, suggesting the central bank would likely need to keep hiking interest rates.

Investors are now looking to the release later on Monday of key consumer price index figures, which comes ahead of the Fed’s next policy meeting.

A below-forecast print for October’s CPI sparked a rally on markets last month as investors bet on a shorter pace of rate hikes, though concerns about a recession continue to weigh on sentiment.

“An ominous feeling is consuming markets ahead of this week’s crucial CPI report and (Fed policy) meeting,” said Stephen Innes at SPI Asset Management.

“While headline inflation continues to drop, the top-side beat on PPI expectations suggests that while inflation might climb down the mountain, the slope remains very uncertain.”

Policy decisions in the United Kingdom, the European Union and several other economies are also due this week.

All three main indexes on Wall Street fell Friday, and Asia followed suit.

Hong Kong led the way down — shedding more than two percent — having surged last week, while Tokyo, Shanghai, Sydney, Seoul, Singapore, Taipei and Wellington were also in the red.

London opened lower even as data showed the UK economy grew more than expected in October. Paris and Frankfurt also slipped.

The dollar extended Friday’s gains against most of its peers, having surged for much of the year owing to the Fed’s sharp rate hikes.

Chris Weston, at Pepperstone Group, added that should core consumer prices go above 6.3 percent “then the US dollar should rally hard, and equity should find decent sellers”. 

“Conversely, a read below six percent would be a surprise and the US dollar bears should find comfort in that.”

Investors are also keeping an eye on developments in China as it moves away from the zero-Covid policy that has hammered its economy, the world’s second-largest.

The shift comes after widespread protests against the near three-year strategy, though there is concern about the expected spike in infections.

“One official was quoted as saying the mortality rate from Omicron is around 0.1 percent, similar to the common flu and that most people recover within 7-10 days,” said National Australia Bank’s Tapas Strickland.

“The change in language continues the tentative pivot from China over the past few weeks, both in rhetoric around the virus, and also in the easing of restrictions.”

– Key figures around 0820 GMT –

Tokyo – Nikkei 225: DOWN 0.2 percent at 27,842.33 (close)

Hong Kong – Hang Seng Index: DOWN 2.2 percent at 19,463.63 (close)

Shanghai – Composite: DOWN 0.9 percent at 3,179.04 (close)

London – FTSE 100: DOWN 0.3 percent at 7,353.72

Euro/dollar: DOWN at $1.0526 from $1.0534 on Friday

Dollar/yen: UP at 136.74 yen from 136.57 yen

Pound/dollar: DOWN at $1.2243 from $1.2262

Euro/pound: UP at 85.94 pence from 85.90 pence

West Texas Intermediate: UP 0.7 percent at $71.53 per barrel

Brent North Sea crude: UP 0.5 percent at $76.47 per barrel

New York – Dow: DOWN 0.9 percent at 33,476.46 (close)

Asian markets dropped and the dollar edged up Monday after a forecast-beating US inflation reading dampened hopes for a more dovish tilt by the Federal Reserve in its battle against soaring prices.

The producer price index reading for November followed data showing the jobs market remained tight, suggesting the central bank would likely need to keep hiking interest rates.

Investors are now looking to the release later in the day of key consumer price index figures, which comes ahead of the Fed’s next policy meeting.

A below-forecast print for October’s CPI sparked a rally on markets last month as investors bet on a shorter pace of rate hikes, though concerns about a recession continue to weigh on sentiment.

“An ominous feeling is consuming markets ahead of this week’s crucial CPI report and (Fed policy) meeting,” said Stephen Innes at SPI Asset Management.

“While headline inflation continues to drop, the top-side beat on PPI expectations suggests that while inflation might climb down the mountain, the slope remains very uncertain.”

Policy decisions in the United Kingdom, the European Union and several other economies are also due this week.

All three main indexes on Wall Street fell Friday, and Asia followed suit.

Hong Kong led the way down, having surged last week, while Tokyo, Shanghai, Sydney, Seoul, Taipei, Jakarta and Wellington were also in the red.

The dollar extended Friday’s gains against most of its peers, having surged for much of the year owing to the Fed’s sharp rate hikes.

Chris Weston, at Pepperstone Group, added that should core consumer prices go above 6.3 percent “then the US dollar should rally hard, and equity should find decent sellers”. 

“Conversely, a read below six percent would be a surprise and the US dollar bears should find comfort in that.”

Investors are also keeping an eye on developments in China as it moves away from the zero-Covid policy that has hammered its economy, the world’s second-largest.

The shift comes after widespread protests against the near three-year strategy, though there is concern about the expected spike in infections.

“One official was quoted as saying the mortality rate from Omicron is around 0.1 percent, similar to the common flu and that most people recover within 7-10 days,” said National Australia Bank’s Tapas Strickland.

“The change in language continues the tentative pivot from China over the past few weeks, both in rhetoric around the virus, and also in the easing of restrictions.”

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 0.3 percent at 27,821.12 (break)

Hong Kong – Hang Seng Index: DOWN 1.8 percent at 19,545.33 

Shanghai – Composite: DOWN 0.6 percent at 3,188.61

Euro/dollar: DOWN at $1.0511 from $1.0534 on Friday

Dollar/yen: UP at 136.88 yen from 136.57 yen

Pound/dollar: DOWN at $1.2221 from $1.2262

Euro/pound: UP at 86.00 pence from 85.90 pence

West Texas Intermediate: UP 0.5 percent at $71.36 per barrel

Brent North Sea crude: UP 0.3 percent at $76.32 per barrel

New York – Dow: DOWN 0.9 percent at 33,476.46 (close)

London – FTSE 100: FLAT at 7,476.63 (close)

Global stocks diverged on Friday after hotter-than-expected US wholesale prices renewed concerns that the Federal Reserve will stick to aggressive policies against inflation.

Investors have been poring over economic data as they try to guess whether the US central bank will shift to a softer approach to interest rate hikes or maintain its hawkish stance at a regular meeting next week.

China’s easing of its zero-Covid restrictions, which have hammed the world’s second biggest economy, have been welcomed by the markets this week.

Investors also tracked news that China’s consumer inflation slowed further in November, falling below two percent and providing authorities room to unveil fresh stimulus measures.

Hong Kong shares closed sharply higher Friday, building on big gains for the week while Chinese mainland markets were also higher.

European markets were up in afternoon trading.

But Wall Street opened lower as US government data showed the producer price index (PPI) — a gauge of inflation — rose by 0.3 percent in November, slightly higher than forecast by analysts.

“The numbers themselves weren’t mean so to speak. They were simply less friendly than what market participants had hoped they would be,” said Briefing.com analyst Patrick O’Hare.

The reading will raise concerns that key consumer price data due next week may not be “as friendly as expected either, which in turn will keep the market on edge about the Fed’s monetary policy path,” he said.

The Fed has raised rates by 0.75 percentage points in four straight meetings in efforts to tame four-decade high inflation.

The central bank is widely expected to slow the pace to 0.50 percentage points at its final meeting of the year next week.

But investors are concerned that a strong jobs market and other data might convince the Fed to keep tightening monetary policy longer than had been hoped.

The European Central Bank and the Bank of England also have rate decisions due next week after also hiking their rates sharply this year.

“The hotter-than-expected PPI print called into question the ‘peak inflation’ narrative, although traders know that it is too late for the Fed to change its mind about a 50 (basis points) hike next week,” said Fawad Razaqzada, market analyst at Forex.com and City Index.

Elsewhere, oil prices jumped by more than one percent as Russian President Vladimir Putin threatened to cut production after Western nations imposed a $60 price cap on Russian crude.

– Key figures around 1450 GMT –

New York – Dow: DOWN 0.3 percent at 33,693.79 points

London – FTSE 100: UP 0.2 percent at 7,484.25

Frankfurt – DAX: UP 0.5 percent at 14,333.84

Paris – CAC 40: UP 0.3 percent at 6,664.75

EURO STOXX 50: UP 0.3 percent at 3,933.79

Tokyo – Nikkei 225: UP 1.2 percent at 27,901.01 (close)

Hong Kong – Hang Seng Index: UP 2.3 percent at 19,900.87 (close)

Shanghai – Composite: UP 0.3 percent at 3,206.95 (close)

Euro/dollar: DOWN at $1.0534 from $1.0560 on Thursday

Dollar/yen: DOWN at 136.44 yen from 136.61 yen

Pound/dollar: UP at $1.2262 from $1.2239

Euro/pound: DOWN at 85.89 pence from 86.24 pence

Brent North Sea crude: UP 1.2 percent at $77.08 per barrel

West Texas Intermediate: UP 1.4 percent at $72.44 per barrel

Chinese President Xi Jinping on Friday touted close security and energy ties with Gulf nations during summit meetings in Saudi Arabia that have highlighted tensions with Washington.

On the third and final day of his visit, Xi attended summits of the six-member Gulf Cooperation Council and a broader China-Arab leaders’ meeting.

This is only Xi’s third journey outside China since the coronavirus pandemic began.

The discussions came one day after bilateral sit-downs with Saudi royals yielded a joint statement stressing “the importance of stability” in oil markets — a point of friction with the United States. Washington has urged the Saudis to raise production.

“China will continue to firmly support the GCC countries in maintaining their own security… and build a collective security framework for the Gulf,” Xi said at the start of the China-GCC summit.

“China will continue to import large quantities of crude oil from GCC countries on an ongoing basis,” he said, also vowing to expand other areas of energy cooperation including liquefied natural gas imports.

Oil from Saudi Arabia alone accounted for 17 percent of China’s imports last year, and last month Qatar announced a 27-year natural gas deal with China.

Earlier on Friday, a joint Chinese-Saudi statement spoke of “focusing on emissions rather than sources” in tackling climate change, the approach championed by the resource-rich Gulf monarchies. 

Forty-six bilateral agreements and memorandums of understanding were announced on everything from housing to Chinese language teaching. Both sides are seeking economic and strategic benefits by deepening cooperation. 

However, few details were released despite a Saudi state media report on Thursday that about $30 billion in deals would be signed during Xi’s visit. 

Riyadh and Beijing stressed “deepening relations within the framework of the comprehensive strategic partnership between the two countries, and reaching new and promising horizons”, the statement said. 

Xi’s visit comes during tensions between Saudi Arabia and the United States, its long-time partner and security guarantor, over oil production, human rights issues and regional security. 

It follows US President Joe Biden’s trip to Jeddah in July, before midterm elections, when he failed to persuade the Saudis to pump more oil to calm prices.

– ‘Prestige’ trade deals –

Crown Prince Mohammed bin Salman, Saudi Arabia’s 37-year-old de facto ruler, addressed both summits on Friday, promising “continuing Arab-Chinese cooperation to serve our common goals and aspirations of our peoples”.

The Gulf countries, strategic partners of Washington, are bolstering ties with China as part of an eastward turn that involves diversifying their fossil fuel-reliant economies. 

At the same time China, hit hard by its Covid lockdowns, is trying to revive its economy and widen its sphere of influence, notably through its Belt and Road Initiative which provides funding for infrastructure projects around the world. 

Officials provided few details about the agenda for Friday’s talks, but one potential area of focus was a China-GCC free trade agreement under discussion for nearly two decades. 

Drawing those negotiations to a close would be “a matter of prestige for Beijing,” said Robert Mogielnicki of the Arab Gulf States Institute in Washington.

“It’s not as simple for the GCC states, which seem to be more invested in advancing bilateral ties and are engaged in varying degrees of regional economic competition with their neighbouring member states.”  

A breakthrough on the trade pact could help Saudi Arabia, the Middle East’s biggest economy, diversify its economy in line with the Vision 2030 reform agenda championed by Prince Mohammed. 

Beijing’s foreign ministry has described Xi’s trip as the “largest-scale diplomatic activity between China and the Arab world” since the People’s Republic of China was founded. 

The visit earned a rebuke from the White House, which warned of “the influence that China is trying to grow around the world”. 

Washington called Beijing’s objectives “not conducive to preserving the international rules-based order”.

Global stocks rose Friday on China’s slowing inflation and economic reopening, alongside hopes of less aggressive interest rate hikes next week.

Sentiment brightened on China’s decision to shift away from its nearly three-year zero-Covid strategy of lockdowns and mass testing that slammed the economy.

After widespread protests across the country, leaders have decided to loosen their grip, fanning excitement that growth will pick up as activity returns to normal.

Investors were meanwhile hopeful that central banks in the United States, eurozone and UK will next week ease the pace of interest rate hikes despite inflation remaining at the highest levels in decades.

“Sentiment has been supported by China dropping its Zero Covid policy — and optimism that the sharp central bank policy tightening will become less aggressive,” City Index analyst Fawad Razaqzada told AFP.

“These factors have already been slowly priced in over the past few weeks… (which) means there is a risk we might see the markets drop, as the focus turns to worries over economic growth.”

Markets also rose on news that China’s consumer inflation slowed further in November, falling below two percent and providing authorities room to unveil fresh stimulus measures. 

– US inflation in sights –

Traders were setting their sights also on the release of two key US inflation reports ahead of the Federal Reserve’s final policy meeting of the year.

In light of data signalling that almost a year of interest rate hikes was beginning to impact prices, the US central bank is widely expected to announce a 50 basis point lift at the gathering, compared with the previous four straight 75-point increases.

But there remains some concern that the world’s top economy remains resilient and the jobs market too strong, meaning the Fed might have to keep tightening monetary policy longer than had been hoped.

That uncertainty has weighed on US markets, which have endured a tough December so far, and analysts warned of further pain.

The dollar dropped on Friday, having surged to record or multi-decade highs earlier this year owing to the Fed’s hawkish tilt and its use as a safe-haven hedge against volatility.

Oil prices rebounded slightly but remains down more than 10 percent this week as recession expectations weigh on the demand outlook.

– Key figures around 1200 GMT –

London – FTSE 100: UP 0.1 percent at 7,478.55 points

Frankfurt – DAX: UP 0.6 percent at 14,353.18

Paris – CAC 40: UP 0.3 percent at 6,667.93

EURO STOXX 50: UP 0.4 percent at 3,937.91

Tokyo – Nikkei 225: UP 1.2 percent at 27,901.01 (close)

Hong Kong – Hang Seng Index: UP 2.3 percent at 19,900.87 (close)

Shanghai – Composite: UP 0.3 percent at 3,206.95 (close)

New York – Dow: UP 0.6 percent at 33,781.48 (close)

Euro/dollar: DOWN at $1.0559 from $1.0560 on Thursday

Dollar/yen: DOWN at 135.88 yen from 136.61 yen

Pound/dollar: UP at $1.2267 from $1.2239

Euro/pound: DOWN at 86.08 pence from 86.24 pence

Brent North Sea crude: UP 0.1 percent at $76.24 per barrel

West Texas Intermediate: UP 0.6 percent at $71.91 per barrel

Chinese President Xi Jinping will meet Arab leaders at summits in Riyadh on Friday after striking a series of agreements with Saudi Arabia, strengthening ties as the top oil exporter quarrels with Washington.

The leader of the world’s second biggest economy will sit down with regional rulers on the third and final day of his trip, only his third journey outside China since the coronavirus pandemic began.

After talks with King Salman and his 37-year-old son Crown Prince Mohammed bin Salman, the de facto ruler, the two sides stressed “the importance of stability” in oil markets — a point of friction with the United States, which has urged the Saudis to raise production.

In a joint statement, they also spoke of “focusing on emissions rather than sources” in tackling climate change, the approach championed by the resource-rich Gulf monarchies. 

Forty-six agreements and memorandums of understanding were announced on everything from housing to Chinese language teaching. Both sides are seeking economic and strategic benefits by deepening cooperation.

However, few details were released despite a Saudi state media report on Thursday that about $30 billion in deals would be signed during Xi’s visit.

The two sides “stressed the importance of continuing joint action in all fields, deepening relations within the framework of the comprehensive strategic partnership between the two countries, and reaching new and promising horizons”, the statement said.

Xi’s visit comes at a time of tension between Saudi Arabia and the United States, its long-time partner and security guarantor, over oil production, human rights issues and regional security.

It follows US President Joe Biden’s trip to Jeddah in July, before mid-term elections, when he failed to persuade the Saudis to pump more oil to calm prices.

– ‘Prestige’ trade deals –

State television showed leaders from the six-country, resource-rich Gulf Cooperation Council — including the Qatari emir and Bahraini king — arriving at the conference venue in Riyadh on Friday.

Prince Mohammed addressed the group, briefly reiterating the kingdom’s positions on regional issues such as the war in Yemen. They met privately, to be joined later by Xi and his delegation.

A broader China-Arab summit will follow the China-GCC talks.

The Gulf countries, strategic partners of Washington, are bolstering ties with China as part of an eastward turn that involves diversifying their fossil fuel-reliant economies.

At the same time China, hit hard by its Covid lockdowns, is trying to revive its economy and widen its sphere of influence, notably through its Belt and Road Initiative which provides funding for infrastructure projects around the world.

Officials have provided few details about Friday’s agenda, but one potential area is a China-GCC free trade agreement that has been under discussion for nearly two decades. 

“China will want to draw the lengthy negotiations to a close, as FTAs with major trading blocs is a matter of prestige for Beijing,” said Robert Mogielnicki of the Arab Gulf States Institute in Washington.

“It’s not as simple for the GCC states, which seem to be more invested in advancing bilateral ties and are engaged in varying degrees of regional economic competition with their neighbouring member states.” 

A breakthrough on the trade pact could help Saudi Arabia, the Middle East’s biggest economy, diversify its economy in line with the Vision 2030 reform agenda championed by Prince Mohammed. 

China’s foreign ministry has described Xi’s trip as the “largest-scale diplomatic activity between China and the Arab world” since the People’s Republic of China was founded.

The visit has already earned a rebuke from the White House, which warned of “the influence that China is trying to grow around the world”. Washington called Beijing’s objectives “not conducive to preserving the international rules-based order”.

Chinese President Xi Jinping will meet Arab leaders at summits in Riyadh on Friday after striking a series of agreements with Saudi Arabia, strengthening ties as the top oil exporter quarrels with Washington.

The leader of the world’s second biggest economy will sit down with regional rulers on the third and final day of his trip, only his third journey outside China since the coronavirus pandemic began.

After talks with King Salman and his 37-year-old son Crown Prince Mohammed bin Salman, the de facto ruler, the two sides stressed “the importance of stability” in oil markets — a point of friction with the United States, which has urged the Saudis to raise production.

In a joint statement, they also spoke of “focusing on emissions rather than sources” in tackling climate change, the approach championed by the resource-rich Gulf monarchies. 

Forty-six agreements and memorandums of understanding were announced on everything from housing to Chinese language teaching. Both sides are seeking economic and strategic benefits by deepening cooperation.

However, few details were released despite a Saudi state media report on Thursday that about $30 billion in deals would be signed during Xi’s visit.

The two sides “stressed the importance of continuing joint action in all fields, deepening relations within the framework of the comprehensive strategic partnership between the two countries, and reaching new and promising horizons”, the statement said.

Xi’s visit comes at a time of tension between Saudi Arabia and the United States, its long-time partner and security guarantor, over oil production, human rights issues and regional security.

It follows US President Joe Biden’s trip to Jeddah in July, before mid-term elections, when he failed to persuade the Saudis to pump more oil to calm prices.

– ‘Prestige’ trade deals –

On Friday, Xi is to hold talks with the six-country, resource-rich Gulf Cooperation Council and attend a broader China-Arab summit.

The Gulf countries, strategic partners of Washington, are bolstering ties with China as part of an eastward turn that involves diversifying their fossil fuel-reliant economies.

At the same time China, hit hard by its Covid lockdowns, is trying to revive its economy and widen its sphere of influence, notably through its Belt and Road Initiative which provides funding for infrastructure projects around the world.

Officials have provided few details about Friday’s agenda, but one potential area is a China-GCC free trade agreement that has been under discussion for nearly two decades. 

“China will want to draw the lengthy negotiations to a close, as FTAs with major trading blocs is a matter of prestige for Beijing,” said Robert Mogielnicki of the Arab Gulf States Institute in Washington.

“It’s not as simple for the GCC states, which seem to be more invested in advancing bilateral ties and are engaged in varying degrees of regional economic competition with their neighbouring member states.” 

A breakthrough on the trade pact could help Saudi Arabia, the Middle East’s biggest economy, diversify its economy in line with the Vision 2030 reform agenda championed by Prince Mohammed. 

Yet Mogielnicki said the significance of the announcements made during Xi’s trip would only be clear if the projects become reality.

“When it comes to China’s bilateral relations with the Gulf and broader Middle East, one must remember that signing MoUs and making investment pledges is much easier than actually committing capital,” he said. 

Xi’s trip has already earned a rebuke from the White House, which warned of “the influence that China is trying to grow around the world”. Washington called Beijing’s objectives “not conducive to preserving the international rules-based order”.

Global economic leaders on Friday hailed China’s move away from its hardline zero-Covid policy, with the IMF chief saying the “decisive actions” would help revive growth both in the country and globally.

The relaxation would help to shore up a world economy struggling with the impact of the pandemic and Russia’s invasion of Ukraine, the head of the World Trade Organization said after the conference in the eastern city of Huangshan, hosted by outgoing Chinese Premier Li Keqiang. 

Beijing on Wednesday announced a loosening of its zero-tolerance approach to coronavirus outbreaks, ending large-scale lockdowns and allowing some positive cases to isolate at home following widespread protests against the restrictions.

The decision indicated that the world’s second-largest economy is finally shifting towards living with Covid after years of grinding curbs stifled growth.

“We welcome very much the decisive actions taken by the Chinese authorities… to recalibrate the Covid policies so as to create a better impetus for the revival of growth in China,” Kristalina Georgieva said at a press briefing with the heads of other major economic institutions.

The effort to boost vaccination rates and anti-viral treatments “is very good for the Chinese people, but also important for Asia and the rest of the world”, Georgieva added.

“China’s performance matters (not just) to China — it matters to the world economy as well.”

The global economy has been rocked this year, with Russia’s brutal invasion of Ukraine adding to a stuttering post-pandemic recovery and a cost of living crisis in many countries.

The retreat from zero-Covid “will help remove one set of uncertainties” in a world reeling from the impacts of the pandemic, the war in Ukraine and climate change, said WTO Director-General Ngozi Okonjo-Iweala, at the same briefing.

Secretary-General of the Organisation for Economic Co-operation and Development, Mathias Cormann, said the “adjustments will support the strength of the recovery both in China and globally”.

Beijing’s step back from zero-Covid has so far helped to prop up global stock markets fearful of a looming recession in the United States, but analysts have warned that China’s route to a full reopening remains bumpy.

– Further relaxations –

Long criticised for disrupting business operations and global supply chains, the zero-Covid policy has acted as a constraint on China’s economy, with analysts expecting Beijing to miss its stated annual growth target of 5.5 percent.

Public frustration with snap lockdowns and mass testing boiled over last month as protesters took to the streets in cities around the country, with some calling for greater political freedoms in China’s most widespread demonstrations since 1989.

On Friday, China rolled back more restrictions, with the culture and tourism ministry announcing that visitors will no longer be required to show “health codes” when entering a range of different venues.

A spokesperson for the National Health Commission said at a press briefing on Friday that hospitals must not refuse care to coronavirus-positive patients, state broadcaster CCTV reported.

The move marks a further pivot away from China’s longstanding strategy of isolating all those who test positive and treating them in specialist state-run facilities.

Demand for home treatments and personal protective gear has surged amid concerns over large-scale outbreaks, even though official statistics have reported a decline in new cases in recent days.

China’s market regulator said Friday that it would crack down on price gouging after the retail price of a traditional flu treatment as much as quadrupled in the first few days of December.

Stock markets rose Friday and the dollar dipped as traders continue to weigh concerns about rising interest rates and a possible recession against optimism over China’s economic reopening.

With few Thursday catalysts to work with, traders were setting their sights on the release of two key US inflation reports — on Friday and Monday — and the Federal Reserve’s final policy meeting of the year.

In light of data signalling that almost a year of interest rate hikes was beginning to impact prices, the US central bank is widely expected to announce a 50 basis point lift at the gathering, compared with the previous four straight 75-point increases.

But there remains some concern that the world’s top economy remains resilient and the jobs market too strong, meaning the Fed might have to keep tightening monetary policy longer than had been hoped.

That uncertainty has weighed on US markets, which have endured a tough December so far, and analysts warned of further pain.

“We think the worst is yet to come,” Gary Schlossberg, at Wells Fargo Investment Institute, told Bloomberg Television.

“We’re looking for a moderate recession next year, which means a moderate decline in corporate profits is our target for the year.”

The mood was slightly better in Asia, particularly Hong Kong, where investor sentiment has been buoyed by China’s decision to shift away from its nearly three-year zero-Covid strategy of lockdowns and mass testing that has battered the economy.

After widespread protests across the country, leaders have decided to loosen their grip, fanning excitement that growth will pick up as activity returns to normal.

A pledge to help the embattled property sector, which accounts for a huge part of the economy, was also providing a lift.

World economic leaders on Friday hailed Beijing’s move away from its hardline policy, with International Monetary Fund boss Kristalina Georgieva saying the “decisive actions” would help revive growth both in the country and globally.

– ‘Positive on China’ –

“The process will likely be gradual and bumpy over the year ahead, due to low immunisation of the population and unpreparedness of the health system to deal with a possible further surge in cases,” Silvia Dall’Angelo, at Federated Hermes, said in a note.

“Reopening should gain traction in the second half of next year. At that stage, the Chinese recovery will likely accelerate, as the removal of restrictions will allow fiscal and monetary stimulus to be effective.”

And JPMorgan strategist Marko Kolanovic added that he “remains positive on China, due to favourable monetary conditions as well as an eventual full reopening and end of Covid”.

Hong Kong rose more than two percent, while there were also positive performances in Tokyo, Shanghai, Sydney, Seoul, Singapore, Taipei, Bangkok, Mumbai and Manila.

London, Paris and Frankfurt opened with gains.

And the dollar dropped against most peers, having surged to record or multi-decade highs earlier this year owing to the Fed’s hawkish tilt and its use as a safe-haven hedge against volatility.

However, SPI Asset Management’s Stephen Innes warned that “with the who’s who of Wall Street advising clients to expect a market downswing in 2023, I doubt many investors are getting too excited about the move” higher in equities.

Oil prices rose after another big drop, with both main contracts down more than 10 percent this week as expectations for a recession in the United States and elsewhere weighed on demand expectations.

– Key figures around 0820 GMT –

Tokyo – Nikkei 225: UP 1.2 percent at 27,901.01 (close)

Hong Kong – Hang Seng Index: UP 2.3 percent at 19,900.87 (close)

Shanghai – Composite: UP 0.3 percent at 3,206.95 (close)

London – FTSE 100: UP 0.3 percent at 7,496.00

Euro/dollar: UP at $1.0570 from $1.0560 on Thursday

Dollar/yen: DOWN at 136.34 yen from 136.61 yen

Pound/dollar: UP at $1.2253 from $1.2239

Euro/pound: UP at 86.25 pence from 86.24 pence

West Texas Intermediate: UP 0.4 percent at $71.75 per barrel

Brent North Sea crude: UP 0.4 percent at $76.43 per barrel

New York – Dow: UP 0.6 percent at 33,781.48 (close)