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Stock markets driven by speculation linked to China

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(Paris) Speculation about a possible easing of China’s zero-COVID-19 policy led to a jump in equity markets on Friday, as the future of US monetary policy weighed on US markets.

European stock markets rebounded strongly, some took up more than 3% during the session. At the close, Paris climbed 2.77%, Frankfurt 2.51%, London 2.03% and Milan 2.54%.

The New York Stock Exchange had opened sharply higher before slowing down. Around 4:55 p.m. GMT, the Dow Jones gained 0.12%, the S&P 0.06%, while the NASDAQ yielded 0.30%.

“It seems that China could end a restrictive policy concerning its airlines” and “that a messenger RNA vaccine is being approved in China for foreign residents”, specifies Raphaël Thuin, head of strategies of Tikehau Capital’s capital markets.

The Chinese government has so far not confirmed these speculations, and for Michael Hewson, analyst at CMC Markets, “with winter approaching, it seems highly unlikely that China will be able to reopen its economy. […] without causing a new wave of COVID-19 contamination.

The other news of the session was the publication of figures on the American employment market: the unemployment rate rose to 3.7% in October, while 261,000 job creations were recorded, a figure higher than analysts’ expectations.

“Pretty mixed” data, according to Raphaël Thuin who notes “signs of deceleration in the market”, a good thing since for the American central bank to achieve its objective of bringing inflation back to around 2%, “it will take a slowdown economy and a cooling of the labor market”.

Above all, the increase in average hourly compensation slowed over one year to 4.7% instead of 5% in September, which is likely to reassure the markets about the risk of wages feeding an inflationary spiral.

In the process, the dollar fell by 1.59% against the euro (at 0.9907 dollars for one euro) and by 1.09% against the pound (at 1.1284 dollars for one pound), around 16 h 55 GMT.

On the bond market, after a jump recorded at the time of the publication of employment data, the interest rate on the American 2-year debt, very sensitive to monetary policy, fell slightly, to 4.67% towards 4:55 p.m. GMT.

Luxury and mining take advantage of China

Stocks in the luxury and commodities sector were the main beneficiaries of speculation regarding a possible easing of China’s zero-COVID-19 policy.

On the luxury side, LVMH gained 5.75%, Hermès 3.71%, L’Oréal 6.78%, Richemont 6.76%, Moncler 7.41%. Kering (+7.07%) and Estée Lauder (+6.83%) are both in the running to buy the Tom Ford brand, according to an article in the Wall Street Journal.

On the mining side, Anglo American took 11.13%, Fresnillo 7.69%, Rio Tinto 7.59% and ArcelorMittal 6.48%.

As for oil prices, they were moving to their highest in almost a month, benefiting from the tightening of supply which is looming as speculation regarding the zero-COVID-19 policy in China.

The barrel of Brent from the North Sea for January delivery climbed around 4:50 p.m. GMT by 3.88% to 98.33 dollars, that of American WTI for December delivery by 3.95% to 91.64 dollars.

Chinese tech booming

Like the Hong Kong Stock Exchange’s Hang Seng Index, which jumped 5.36% on Friday, shares of Chinese digital giants listed on Wall Street were climbing. Alibaba took 6.04%, JD.com 8.58% and Baidu 7.70%.

Adidas at full speed

The stock of sports equipment maker Adidas jumped 21.38% after news broke of ongoing talks to recruit rival Puma’s current CEO (-0.50%), Bjørn Gulden, as the CEO’s potential successor. adidas current Kasper Rorsted, who is due to leave in 2023.

Commodities and bitcoin

The price of European natural gas fell by 6.35%, to 117.49 euros per megawatt hour.

Bitcoin gained 2.64% to $20,775.



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