Global Stocks Gain as China Rebounds; Dollar Slips: Markets Wrap

(Bloomberg) — A gauge of global shares climbed, led by a rebound in Chinese stocks as nationwide unrest over Covid curbs eased. The dollar fell amid improved sentiment for risk taking.

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European and US equities futures advanced after the S&P 500 pared its monthly gain during the Wall Street session as investors continued to parse comments from Federal Reserve officials.

Shares rallied in Hong Kong and on the mainland as some investors speculated that the protests may hasten a shift away from Covid-Zero policies.

China’s National Health Commission issued a statement saying vaccinations would be sped up for people aged above 80. That came as traders awaited a regular briefing by government officials for any more adjustments in Covid policies, although the forum has rarely been used to announce large changes.

Of broad significance for global markets, Fed Bank of St. Louis President James Bullard warned that investors may be underestimating the chances of higher rates. His New York counterpart John Williams noted policymakers have more work to do to curb inflation, and Fed Vice Chair Lael Brainard said the string of supply shocks is keeping inflation risks elevated.

A gauge of the dollar fell following two days of gains. The euro and Japanese yen rose, as did an index of emerging-markets currencies.

Global bonds joined US peers in signaling a recession, with a gauge measuring the worldwide yield curve inverting for the first time in at least two decades. Treasuries were little changed. Yields on government bonds rose in Australia and New Zealand.

Elsewhere in markets, oil extended a rebound from the lowest level in almost a year on speculation that the Organization of Petroleum Exporting Countries and its allies will deepen supply cuts to respond to weakening global demand.

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Investors remained focused on developments in China Tuesday, and further ahead to Fed Chair Jerome Powell’s speech Wednesday. Many economists expect he’ll cement bets that the Fed will slow its pace of rate increases next month — while reminding Americans that its fight against inflation will run into 2023.

Stagflation is the key risk for the global economy in 2023, according to investors who said hopes of a rally in markets are premature following this year’s brutal selloff. Almost half of the 388 respondents to the latest MLIV Pulse survey said a scenario where growth continues to slow while inflation remains elevated will dominate globally next year.

Key events this week:

• Euro area economic confidence, consumer confidence, Tuesday

• US Conference Board consumer confidence, Tuesday

• EIA crude oil inventory report, Wednesday

• China PMI, Wednesday

• Fed Chair Jerome Powell speech, Wednesday

• Fed releases its Beige Book, Wednesday

• US wholesale inventories, GDP, Wednesday

• S&P Global PMIs, Thursday

• US construction spending, consumer income, initial jobless claims, ISM Manufacturing, Thursday

• BOJ’s Haruhiko Kuroda speaks, Thursday

• US unemployment, nonfarm payrolls, Friday

• ECB’s Christine Lagarde speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.4% as of 6:40 a.m. London time. The S&P 500 fell 1.5%

• Nasdaq 100 futures rose 0.6%. The Nasdaq 100 fell 1.4%

• Euro Stoxx 50 futures rose 0.3%

• Japan’s Topix fell 0.6%

• The Hang Seng Index rose 3.8%

• The Shanghai Composite rose 2.3%

Currencies

• The Bloomberg Dollar Spot Index fell 0.5%

• The euro rose 0.3% to $1.0373

• The British pound rose 0.4% to $1.2009

• The Japanese yen rose 0.4% to 138.37 per dollar

• The offshore yuan rose 1% to 7.1728 per dollar

Cryptocurrencies

• Bitcoin rose 1.6% to $16,456.52

• Ether rose 2.8% to $1,204.96

Bonds

• The yield on 10-year Treasuries was little changed at 3.68%

• Japan’s 10-year yield was unchanged at 0.25%

• Australia’s 10-year yield advanced nine basis points to 3.60%

Commodities

• West Texas Intermediate crude rose 1.6% to $78.45 a barrel

• Spot gold rose 0.7% to $1,754.28 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Rita Nazareth, Richard Henderson and Rik Stevens.

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