World stocks eye 2% weekly loss
Hong Kong, China stocks hit 3-mth highs
Oil heads for 10% weekly loss
U.S. PPI inflation data at 1330 GMT
LONDON, Dec 9 (Reuters) - U.S. stock index futures were
indicating a higher Wall Street open and world stocks rallied on
Friday on expectations China's economy would strengthen as
COVID-19 curbs ease, but markets remain cautious ahead of a
Federal Reserve meeting next week.
China's Premier Li Keqiang, in comments carried by state
media, said on Thursday the country's shift in COVID-19 policy
would allow the economy to pick up pace, a day after a top-level
party meeting pledged to focus on stabilising growth while
optimising pandemic measures.
Fed policymakers meet next week and are likely to announce a
50 basis point hike in the U.S. central bank's lending rate,
while indicating a slower pace of future rate hikes.
"The market is very much focused on what the Fed is going to
do on Wednesday, no one wants to take on any big positions,"
said Giles Coghlan, chief currency analyst at HYCM, though he
added that Chinese stocks were helped by the fact that China had
"made that COVID pivot".
The MSCI world equity index rose 0.3% but
was heading for a loss of nearly 2% on the week.
U.S. S&P futures and European stocks gained
The U.S. producer price index for final demand at 1330 GMT
is forecast to show a rise of 7.2% in the last 12 months, versus
8% the previous month, ahead of closely-watched consumer price
inflation data next week.
University of Michigan consumer sentiment data is also due
later on Friday.
Britain's FTSE steadied, reversing early losses as
financial stocks benefited from a government move to overhaul
Hong Kong's Hang Seng index jumped 2.3% to
three-month highs, with mainland developers up a
whopping 9.9% to a four-month high. Chinese blue chips
rose 1% to their highest in nearly three months.
The world's largest investment banks expect global economic
growth to slow further in 2023 following a year roiled by the
Ukraine conflict and soaring inflation, which triggered one of
the fastest monetary policy tightening cycles in recent times.
Investors sold stocks and bought gold in the week to
Wednesday, withdrawing $5.7 billion from equity funds, BofA
Global Research said, a week of "small, joyless flows", as
markets position for the approaching end of the Fed's rate
Futures have priced in a near-certain possibility that the
Fed will slow down its rate hike to 50 basis points next week,
but the target U.S. federal funds rate would have to peak around
4.9% by next May.
"This slowing is not a signal that the central bank's job is
nearly done...the slower pace of hikes starts a new phase of the
Fed's tightening cycle," said Brian Martin, head of G3 economics
"With inflation proving sticky and the labour market still
buoyant, the risks to our 5.00% terminal view are to the
In addition to the Fed, the European Central Bank and the
Bank of England are also set to announce interest rate hikes
next week as policymakers continue to put the brakes on growth
to curb inflation.
"There is certainly plenty to be fearful of economically,
especially in Europe and the UK where the energy and cost of
living crises seem likely to have already tipped, or will
imminently tip, many economies into recession," said Sue Noffke,
head of UK equities at Schroders.
The U.S. dollar was steady against a basket of major
currencies. It fell 0.6% to 135.88 yen.
The euro was flat at $1.0555, below recent five-month
The benchmark 10-year Treasury yield was steady
Treasury yields fell to the lowest in three years earlier in
the week on expectations of slower growth or that a recession
will curb the rise in U.S. rates.
Euro zone banks are set to repay early another 447.5 billion
euros in multi-year loans from the European Central Bank,
bringing the total reduction of outstanding loans to nearly 800
billion euros in just a few weeks, the ECB said.
German 10-year government bond yields, the
benchmark for the euro zone, gained 6 bps to 1.876%.
Oil was heading for a 10% weekly loss on worries over a
weak economic outlook weighing on oil demand.
U.S. West Texas Intermediate crude futures rose 0.5%
to $71.81 per barrel, while Brent crude was steady at
$76.16 a barrel.
Gold rose 0.6% to $1,800 per ounce.
(Additional reporting by Stella Qiu in Sydney; editing by Kim
Coghill, Simon Cameron-Moore and Chizu Nomiyama)