Global stocks eye 2% weekly loss
Hong Kong, China stocks hit 3-month highs
Oil Heads for a 10% Weekly Loss
US PPI inflation data at 13:30 GMT
By Carolyn Cohn
LONDON, Dec 9 (Reuters) – U.S. stock index futures were pointing higher from the open on Wall Street and global stocks rallied on Friday on expectations of the Chinese economy strengthening as the brakes on the COVID-19 is easing, but markets remain cautious ahead of a Federal Reserve meeting next week.
Chinese Premier Li Keqiang, in comments carried by state media, said on Thursday that the country’s change in COVID-19 policy would allow the economy to pick up speed, a day after a meeting of the party at the highest level that is committed to focusing on stabilizing growth while optimizing the pandemic. measures.
Fed policymakers will meet next week and are expected to announce a 50 basis point hike in the US central bank lending rate, while indicating a slower pace of future rate hikes.
“The market is very focused on what the Fed is going to do on Wednesday, nobody wants to take big positions,” said Giles Coghlan, chief currency analyst at HYCM, although he added that Chinese stocks had been helped. by the fact that China had “pivoted this COVID”.
The MSCI global equity index rose 0.3% but was heading for a loss of almost 2% for the week.
US S&P futures and European stocks gained 0.4%.
The U.S. Producer Price Index for final demand at 13:30 GMT is expected to show a rise of 7.2% over the past 12 months, down from 8% the previous month, ahead of closely watched price inflation data. for consumption next week.
Consumer sentiment data from the University of Michigan is also due later Friday.
Britain’s FTSE stabilized, reversing early losses as financial stocks benefited from a government decision to restructure the sector.
Hong Kong’s Hang Seng index jumped 2.3% to three-month highs as mainland promoters rose 9.9% to a four-month high. Chinese blue chips rose 1% to their highest level in nearly three months.
The world’s biggest investment banks expect global economic growth to slow further in 2023 after a year troubled by conflict in Ukraine and soaring inflation, which triggered one of the tightening cycles of monetary policy in recent times.
Investors sold stocks and bought gold in the week to Wednesday, pulling $5.7 billion out of equity funds, BofA Global Research said, a week of “joyless small flows” as markets are positioning themselves for the near end of the Fed’s rate hike cycle.
Futures have priced in the near-certain possibility that the Fed will slow its rate hike to 50 basis points next week, but the target US fed funds rate is expected to peak around 4.9% by next May.
“This slowdown is not a signal that the central bank’s job is nearly done…the slower pace of increases is beginning a new phase in the Fed’s tightening cycle,” said Brian Martin, chief financial officer. G3 economy at ANZ.
“With inflation proving sticky and the labor market still buoyant, risks to our 5.00% terminal view are on the upside.”
Besides the Fed, the European Central Bank and the Bank of England are also expected to announce interest rate hikes next week as policymakers continue to curb growth to curb inflation.
“There is certainly cause for fear economically, particularly in Europe and the UK where the energy and cost of living crises appear to have already tipped, or will tumble imminently, many economies into recession,” said UK chief Sue Noffke. shares at Schroders.
The US dollar remained stable against a basket of major currencies. It fell 0.6% to 135.88 yen.
The euro was steady at $1.0555, below recent five-month highs.
The benchmark 10-year Treasury yield remained stable at 3.4924%.
Treasury yields fell to a three-year low earlier in the week on expectations of slowing growth or that a recession will dampen US rate hikes.
Eurozone banks are expected to prepay an additional 447.5 billion euros in multi-year loans from the European Central Bank, bringing the total reduction in outstanding loans to nearly 800 billion euros in a matter of weeks, the Commission said. ECB.
Yields on 10-year German government bonds, the eurozone benchmark, rose 6 basis points to 1.876%.
Oil was heading for a weekly 10% loss on concerns over a weak economic outlook weighing on oil demand.
U.S. West Texas Intermediate crude futures rose 0.5% to $71.81 a barrel, while Brent crude was flat at $76.16 a barrel.
Gold rose 0.6% to $1,800 an ounce.
(Additional reporting by Stella Qiu in Sydney; editing by Kim Coghill, Simon Cameron-Moore and Chizu Nomiyama)