Oil Slips As Stocks Rise On Hope Of Renewed Demand From China

(CTN NEWS) – Yesterday, world markets increased, and oil prices initially recovered amid expectations that China’s relaxation of its anti-Covid-19 measures will aid in the restoration of global supply chains and lower inflation.

China’s adjustment in policy, announced on Wednesday, would help the country’s economy to pick up the pace, state broadcaster CCTV quoted Premier Li Keqiang as saying yesterday.

A sure sign zero-Covid in China is coming to an end.

We are sat in a crowded room in Anhui with the Chinese Premier Li Keqiang and heads of the IMF, World Bank and WTO. No masks for them. No quarantine for us pic.twitter.com/v6qQEhOhV2

— Leo Lord-Jones (@leolordjones) December 9, 2022

While copper soared on expectations of higher demand from China, its biggest customer, Wall Street, increased on the excitement at a rebound in shares of Chinese companies listed on US exchanges.

Goldman Sachs estimated prices for the metal could approach a record US$11,000 (RM 48,378) a tonne in a year.

“The awareness that China will be back online and creating products will help bring down inflation, and that’s a positive thing.”

Tim Ghriskey, the chief investment strategist at Inverness Counsel in New York, said of the Federal Reserve: “If inflation can go down, the Fed can step aside and halt.”

The yuan traded close to a three-month high, and Hong Kong’s Hang Seng increased by more than 3%.

But experts cautioned that any economic recovery would take time to materialize and that the easing of limits would temporarily lower demand as infections rise.

The S&P 500 halted a five-day losing run, and MSCI’s all-country world index ended four straight losses.

The MSCI index, which measures market performance globally, increased by 0.68 percent, while on Wall Street, the Dow Jones Industrial Average, and S&P 500.

The S&P 500 snaps a five-day losing streak and MSCI's all-country world index ends four straight days of losses. https://t.co/jvkPEA4w6p

— Rappler (@rapplerdotcom) December 9, 2022

And Nasdaq Composite all saw gains of 0.54 percent, 0.75 percent, and 1.13 percent, respectively.

European markets slumped for a sixth session amid mounting fears of an oncoming recession. The STOXX 600 index for all of Europe finished 0.17 percent down.

Markets are delivering inconsistent messages with bonds “getting very bearish” and stock investors expecting an immediate shift by the Fed, said c, a chief investment officer of the Rockefeller Global Family Office in New York.

At their meeting the following week, Fed members are expected to announce a 50-basis-point increase in the lending rate of the US central bank while also signalling a slower rate of future rate increases.

“The bulls may spin the story that inflation expectations and real yields are coming down. They are both headed in the correct direction. Thus, the (recent) equities rally is justified,” according to Chang.

“That’s very short-sighted, he said, because the market is anticipating a recessionary environment and lower earnings estimates.”

Crude prices seesawed as anticipation that a key Canada-to-US pipeline will return to service following a rupture.

And the increase in oil supply weighed on the market at a time when economic slowdowns around the world have lowered energy demand.

US crude futures finished down 55 cents at US$71.46 a barrel, while Brent slid US$1.02 to settle at US$76.15.

Investors evaluated the potential that the Fed’s strict monetary policy could trigger a recession as the dollar slipped lower versus the euro. The euro EUR= climbed 0.47 percent to US$1.0554.

Treasury yields climbed as investors expected a report next week on inflation and the Fed meeting.

Global bond yields, which move inversely to price, have plummeted in recent weeks on fears of slower growth or recessions will restrict the rise in rates.

The yield on 10-year Treasury notes went up 8.5 basis points to 3.493 percent, while Germany’s 10-year bond rate gained 2.6 basis points to 1.845 percent.

Gold prices increased as the dollar weakened, and speculators positioned themselves ahead of the US inflation data and the Fed’s policy pronouncements.

US gold futures closed 0.2 percent higher at US$1,801.50 an ounce.

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