Morning offer: Labor markets get China fillip

A look at the day ahead of Mike Dolan’s US and global markets.

With one glance at the US employment report at the end of a rough week of rising interest rates, global markets were spurred on by another somewhat mysterious Chinese stock rally.

For the third time in just over a week, Chinese and Hong Kong stocks jumped sharply from the depths of their difficult year on the basis of a variety of sketchy reports and vague hopes that the country will soon lift its draconian economy-undermining zero-COVID restrictions. will relieve. None of these reports have been confirmed yet, but some former officials appeared to be encouraging speculation Friday.

Some investors were clearly taking it seriously. The Hang Seng (.HSI) was up 7%, heading for weekly gains of over 10% for the first time since November 2011. The Shanghai Composite (.SSEC) rose 2.7% and headed for a weekly gain of 5.6%, the largest in more than two years.

The sudden surge was helped by reports that the first US audit paper inspections at US-listed Chinese companies – a long-running point of regulatory tension and risk – had been completed early. Others pointed to the visit to Beijing by German Chancellor Olaf Scholz and Chinese President Xi Jinping on Friday of the need for greater cooperation between China and Germany amid “times of change and turmoil”.

As a measure of how important a change to the COVID rule could be, British hedge fund firm Man Group (EMG.L) said it plans to expand in China after the country eases its strict restrictions. But that’s far from consensus — the Wall Street Journal reported Thursday that Tiger Global Management has halted investing in Chinese stocks after Xi tightened his grip on power last month.

However, US stock futures rose slightly higher than the opening, following another round of heavy index losses amid mounting fears over interest rates on Thursday.

The October US jobs report would be another key ingredient in assessing how aggressive the Federal Reserve plans to be next year. U.S. employers likely hired another 200,000 workers last month, even thinking October would be the fewest in nearly two years, and wages likely rose at a moderate pace.

The bumpy earnings season for Big Tech continued to provide negative surprises. PayPal (PYPL.O) shares fell more than 10% after the bell on Thursday after the online payments company cut its revenue growth forecast in anticipation of an economic downturn and saw little e-commerce growth in the holiday quarter.

And not everyone on the job market is rosy. Twitter will email employees Friday if they have been laid off, temporarily closing offices and barring staff entry, following a week of uncertainty over the company’s future under new owner Elon Musk.

Sterling recovered some ground after Thursday’s biggest one-day loss since the failed UK budget at the end of September sent it to an all-time low. The Bank of England accompanied its biggest rate hike in 33 years by insisting that markets overestimate how high it would raise interest rates next year, an implied spike in key rates that would sink the economy into its longest recession on record.

Elsewhere, the Group of Seven Rich Nations and Australia have agreed to set a fixed price when they finalize a price cap for Russian oil later this month, rather than adopt a floating rate, sources said Thursday.

Important developments that should give more direction to the US markets later on Friday:

* Boston Fed President Susan Collins speaks

* US Employment Report October, Canada Employment Report October,

* US Corporate Earnings: Hershey, Dominion Energy, Duke Energy, Cardinal Health, PPL, Cboe Global Markets, Evergy, AES

Chinese stocksReuters Graphics Reuters GraphicsReuters Graphics

By Mike Dolan, edited by Ana Nicolaci da Costa; [email protected]. Twitter: @reutersMikeD

Our Standards: The Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias under the Trust Principles.

Leave a Comment