The majority of stocks increased as traders hailed further easing of China's harsh COVID-19 control policies, which have severely hurt the world's second-largest economy. The actions assisted in offsetting a United States jobs data that shattered expectations and dashed expectations that the Federal Reserve would adopt a more gradual approach to raising interest rates in its fight against inflation.
A steep slowdown in economic growth this year and market trembling has been attributed to the draconian zero-COVID policy, which saw big cities like Shanghai shut down for months. Due to signs that the US central bank may ease up on its monetary tightening as price increases look to be slowing and the economy is weakening, investor mood has improved significantly in recent weeks.
Due to signs that the U.S. central bank may ease up on its monetary tightening as price increases look to be slowing and the economy is weakening, investor mood has improved significantly in recent weeks. According to Stephen Innes of SPI Asset Management, the decision to reopen contributed to "market optimism about the tailwinds of a likely acceleration in growth in 2023 for China-sensitive assets."
"Although there have been several local changes to COVID policies, China has yet to shift away from the zero-COVID policy officially. Instead, they are trying to balance the expected reopening surge in Omicron cases against minimising economic and social costs." Innes added.
Asian markets were bolstered by the more optimistic outlook, with Hong Kong leading the way with a gain of more than 4% and Shanghai adding more than 1%. Gains were also made in Manila, Singapore, Taipei, Sydney, Wellington, Tokyo, and Sydney. London began the day slightly higher, while Paris and Frankfurt declined.
Data on Friday revealing that many more jobs than anticipated were generated in the United States in November helped traders overcome the potential of the second-largest economy in the world getting back on track. Concerns about the economy's continued strength were heightened by a significant increase in wages, meaning the Fed still had a lot of work to do to bring inflation down to its target of 2%.
Even still, the dollar continued to suffer relative to its key rivals as investors reduced their forecasts for U.S. borrowing costs. One of the top performers was the Chinese yuan, which fell below the seven-to-one-dollar mark for the first time in almost three months. Oil prices increased as a result of both the Organization of the Petroleum Exporting Countries (OPEC) and major producers' decision not to increase supply and China's reopening as demand expectations rose.
