Calm Over the Weekend Before the Storm Hits Next Week


 Equity markets finally broke the bearish deadlock as the dollar moved weaker on hopes that China's easing of Covid-19 restrictions would provide a glimmer of hope for a global economic recovery.

Yesterday the Prime Minister of China, Li Keqiang announced the transition from a zero Covid policy that will give room for the Great Wall Country's economy to move again.

Commenting on Inverness Counsel's head of investment strategy, Tim Ghriskey, the news indicates that China is ready to return to 'operations' and that production activity will resume and then inflation can decrease.

He added that when inflation started to fall, it gave space to the Federal Reserve (Fed) to slow down the increase in interest rates.

The positive news seemed to help the Wall Street market when shares of Chinese companies listed in the United States (US) entered a rally.

The Dow Jones Industrial Average rose 0.54%, the S&P 500 climbed 0.75% and the Nasdaq Composite added 1.13%.

In the European region, the STOXX 600 fell 0.17% on fears of a recession while MSCI's gauge of global shares jumped 0.68%.

This morning's Asian trading session also saw Japan's Nikkei 225 up 0.93%, Topix up 0.94%, Australia's S&P/ASX 200 up 0.33%, South Korea's Kospi up 0.28%, Kosdaq down 0.67% and MSCI Asia Pacific up 0.2%.

In the meantime, market players are again expecting the Fed to announce an interest rate hike of 50 basis points next week based on Jerome Powell's previous dovish tone.

The result was seen with the 10-year Treasury note up 8.5 basis points at 3.493%, as investors await next week's Fed meeting and inflation report.