Stocks and oil rally on reports of COVID respite in China

LONDON/SINGAPORE, Nov 4 (Reuters) – Global stocks rose on Friday for the first time in three days ahead of key U.S. jobs data, as investors welcomed news that China could ease its COVID rules, boosting major currencies against the dollar and prompting a 2% rally in oil.

The MSCI World Equity Index (.MIWD00000PUS) rose 0.3% on the day, breaking two straight days of losses, but was still heading for a weekly loss of almost 3%, after further significant rate hikes from the Federal Reserve and Bank from England.

China is working on a plan to end a system that banned individual flights to bring in passengers infected with the COVID-19 virus, Bloomberg News reported on Friday, citing people familiar with the matter.

On Friday, China announced its highest daily number of new local cases of COVID-19 in six months and a Foreign Ministry spokesman said he was unaware of the report, but shares still surged, pushing Shanghai’s CSI 300 (.CSI300) up more than 3%. The Hang Seng (.HSI) rose 5.4%, taking the week’s gains to 8.75%, its strongest weekly performance in a decade.

“That rumor we heard earlier in the week about possible experiments to move away from zero COVID, I guess, is still driving things forward, which is a pretty flimsy excuse for stocks to rally.” , said Robert, regional head of research at ING. Carnel said.

“We don’t think we’ll see a significant change in policy until at least after the two sessions meet in March. So it’s a long way from here,” he added.

China-sensitive stocks such as mining companies and luxury goods makers rallied in Europe, lifting the STOXX 600 (.STOXX) nearly 1% to reach a seven-week high. US index futures rose 0.6-0.8%, suggesting an upbeat start on Wall Street, where the S&P 500 (.SPX) is heading for its biggest weekly decline since late September.

With risk appetite higher than usual, the dollar depreciated against a basket of major currencies, losing 0.4%, which boosted the prices of the euro, oil and gold.

But those gains were muted as the month’s most watched data point – US employment – was due later.

Economists expect 200,000 workers to have been added to the nonfarm payroll in the United States in October. That would mark the slowest pace of growth yet in 2022, but most indicators suggest the labor market remains robust.

This is one of the factors that allowed the Fed to relentlessly raise interest rates to control inflation. Wage inflation is expected to have picked up again last month, albeit at a slower pace.

“This is obviously a double-edged sword, in that it offers some comfort to the FOMC in its battle against inflation, but on the other hand puts greater pressure on household incomes” , said Marc Ostwald, chief economist of ADM Investor Services.

Markets were rattled earlier in the week by Fed Chairman Jerome Powell, who said it was “very premature” to think about slowing the pace of monetary tightening and that interest rates would likely peak further. higher and later than investors currently expect.

‘Chair Powell is once again removing the punch bowl, in response to a bit of a party,’ Citi analysts said, referring to the rise in stocks in recent days in hopes of a change in tone. from the central bank.

In currencies, the pound rose 0.75% against the dollar to $1.12430, erasing some of Thursday’s 2% decline after the Bank of England said the economy was facing a two-year recession even as it highest rates since 1989.

In commodities, oil rebounded, fueled by hopes of a relaxation of zero-COVID rules in China, home to some of the world’s biggest energy consumers.

Brent crude rose 2% to $96.96 a barrel, while U.S. crude gained 2.8% to trade at $90.63 a barrel.

With the dollar retreating, gold saw a price increase of 1.4% to around $1,652 an ounce.

Additional reporting by Summer Zhen in Hong Kong; Editing by Kim Coghill and Emelia Sithole-Matarise

Our standards: The Thomson Reuters Trust Principles.

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