Global equities rise on optimism over Chinese recovery
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Global equities rallied to add a second week to an upbeat start to the year, helped by China’s overnight border opening and data from the US and Europe calmed fears of significant monetary tightening by major global central banks.
The pan-European STOXX 600 index rose 0.9% at the close, posting its best weekly performance in more than nine months on Friday after a slew of positive data — including data showing strong growth in factory activity in the euro zone and lower headline inflation in the Region – signals signs of a less severe recession than expected and eases price pressures. The data also showed a slowdown in wage growth in the United States.
The data allayed fears that the US Federal Reserve and European Central Bank will continue to tighten monetary policy at a strong pace.
Technology stocks, which are sensitive to interest rate movements, rose 3.4%.
Industrial production in Germany, Europe’s largest economy, rose slightly more-than-expected in November, adding to optimism and pushing Germany’s DAX index up 1.3 percent.
Data showed that euro-zone investor sentiment rose in January for the third straight month to its highest level since June 2022, but remained in negative territory, reflecting the difficult economic environment.
Travelers flocked to China by air, land and sea on Sunday as Beijing opened its borders, which have been virtually closed since the COVID-19 pandemic began.
Mining stocks rose 2.2 percent as base metal prices rose on hopes of a recovery in demand from main consumer China. Financials with exposure to China also rose 1.4%.
Wall Street’s main indices opened higher today on optimism over China’s opening of borders, while signs of a slowdown in the labor market fueled bets that the US Federal Reserve will slow rate hikes.
The Dow Jones Industrial Average opened 33.78 points, or 0.10%, at 33,664.39 points.
The Standard & Poor’s 500 Index started trading up 15.74 points, or 0.40%, to 3910.82 points, while the Nasdaq Composite was up 92.81 points, or 0.88%, to 10662.11 points.
South African stocks
The main index of South Africa’s Johannesburg Stock Exchange rose to a new record high today, as stocks around the world surged amid restrictions lifted to contain the burgeoning coronavirus in China and expectations of a slowdown in the pace of interest rate hikes in the United States.
Bloomberg news agency said the main index rose 2.2% to continue its rise for the fifth straight day, the longest period of continuous gains since last November, thanks to gains in metallurgical and mining company shares . who rely on China to export their products.
“When growth starts again in China, the demand for our resources will increase” in South Africa, said Ron Keplin, an official at Kratos Capital, a financial brokerage firm in Johannesburg, adding that the lifting of corona restrictions in China has impacted the sub-index Natural would benefit resource stocks in South Africa including Anglo American, BHP Group and Glencore.
The MSCI Emerging Markets Index rose 2.4% for the fifth straight day today, marking its longest consecutive rise since early October.
Today the dollar fell to its lowest level in seven months against the euro as traders bet the latest economic data will urge the Federal Reserve (the US central bank) to slow the pace of rate hikes while China’s reopening Borders gave a boost to riskier currencies. .
The euro was up 0.95% against the dollar to 1.0745 by 1730 GMT, its highest against the greenback since June 9 after rising 1.17% on Friday.
The pound rose 0.72% to 1.218 against the dollar after rising 1.5% on Friday, and the Swiss franc rose 1.1% to $0.9174, its highest since early March.
The dollar’s downward trend, which posted its biggest quarterly losses in 12 years, continued in the last three months of 2022, helped by investor belief that the Fed will not cut interest rates by more than 5 percent from their current levels between will increase 4.25 percent and 4.50 percent as inflation and growth slow.
The monthly jobs report released on Friday showed an increase in nonfarm payrolls and a slowdown in wage growth, which is positive news for the US Federal Reserve.
There were further signs of a slowing economy, with service industry activity in the United States falling in December for the first time in more than two and a half years.
The dollar index, which measures the US dollar’s performance against six major currencies, fell to a seven-month low of 0.2% at 103.54 after falling 1.15% on Friday as investors turned to riskier assets.
Elsewhere, China continued to relax many of its strict movement rules and anti-Covid policies, and reopened its borders.
Optimism about the speed of the economy’s recovery led the offshore yuan to surge to its highest level in five months against the dollar today.
The Australian dollar rose 1.05% to $0.69475, its highest against the US currency since August 30, while the New Zealand dollar rose 0.7% to $0.6394.
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