Stocks and oil rise after reports of a decline in the Corona virus in China

LONDON/SINGAPORE (Reuters) – Global stocks rose on Friday for the first time in three days ahead of key U.S. jobs data, as investors were excited by reports that China could loosen its rules on the coronavirus, boosting and spurring major currencies against the dollar. Oil prices rose by 2%.

The MSCI World Stock Index (.MIWD00000PUS) is up 0.3% on the day, breaking two consecutive days of losses, but still heading for a weekly loss of nearly 3%, following more significant rate increases by the Federal Reserve and the Bank of England. .

China is working on a plan to end the system of banning single flights to carry passengers infected with the COVID-19 virus, Bloomberg News reported Friday, citing people familiar with the matter.

On Friday, China reported the highest daily number of new domestic COVID-19 cases in six months, and a foreign ministry spokesman said he was not aware of the report, but stocks were still rising, sending the Shanghai CSI 300 (.CSI300) index higher. By more than 3%. Hang Seng (.HSI) rose 5.4%, taking the week’s gain to 8.75%, its strongest weekly performance in a decade.

“Those rumors we heard earlier in the week about possible trials to move away from COVID zero, I think, are still pushing things forward, and it’s a pretty flimsy excuse for stocks to go higher,” Robert, ING’s regional head of research, Carnell said.

“We don’t think we’ll see any meaningful change in policy until at least after the two sessions meet in March. So that’s out of reach every now and then,” he added.

China’s sensitive stocks, such as miners and luxury-goods makers, rebounded in Europe, with the STOXX 600 (.STOXX) index rising nearly 1% to a seven-week high. US index futures rose between 0.6-0.8%, indicating an upbeat start on Wall Street, with the S&P 500 (.SPX) heading for its biggest weekly drop since late September.

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

But those gains were muted given that the month’s most-watched data – US employment – was due later.

Economists expect 200,000 workers to be added to the US non-farm payroll in October. This may represent the slowest pace of growth so far in 2022, but most metrics suggest that the job market remains strong.

This was one of the factors that enabled the Federal Reserve to raise interest rates relentlessly to tame inflation. Wage inflation is expected to have increased another month, albeit at a slower pace.

“This is clearly a double-edged sword, insofar as it offers some relief to the FOMC in its fight against inflation, but on the other hand it puts more pressure on household incomes,” said Mark Ostwald, chief global economist at ADM Investor Services.

Markets were rattled earlier in the week by Fed Chair Jerome Powell, who said it was “too early” to consider slowing the pace of monetary tightening and that interest rates were likely to peak higher and further than investors currently expect.

“Chairman Powell is removing the fork again, in response to a bit of partying,” Citi analysts said, referring to the rally in stocks in the past few days on hopes of a change in central bank tone.

In currencies, sterling rose 0.75% against the dollar to $1.12430, paring some of Thursday’s 2% decline after the Bank of England said the economy faced a two-year recession even as it raised interest rates by the most since 1989.

In commodities, oil rebounded, buoyed by hopes of easing coronavirus non-proliferation rules in China, which is home to some of the world’s largest energy consumers.

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

With the dollar weakening, gold enjoyed a 1.4% price rise to around $1,652 an ounce.

Additional reporting by Summer Zain in Hong Kong. Editing by Kim Coogle and Emilia Sithole Mataris

Our Standards: Thomson Reuters Trust Principles.

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