European markets remain cautious after China eases pandemic measures

London, Dec. 5 (Reuters) – European stock indexes opened slightly lower on Monday, finding little support from China’s easing of domestic epidemic restrictions, after U.S. jobs data on Friday dented market sentiment and raised fears of stagnating inflation.

Asian shares rose early on Monday on hopes that China’s move to ease its zero-covid policy would support global growth and boost demand for commodities.

After unprecedented protests against restrictions last weekend, several Chinese cities announced on Sunday that they are easing COVID-19 measures. The news lifted Chinese stocks and the yuan crossed 7 to the dollar. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.7% (.MIAPJ0000PUS).

But the impact on European markets was limited as investors remained cautious about the extent of the reopening, with the MSCI world stock index tracking stocks in 47 countries. (.MIWD00000PUS).

Europe’s STOXX 600 was down 0.1% (.STOXX)Germany’s DAX fell 0.4% (.GDAXI) But London’s FTSE 100 rose 0.2% (.FTSE).

“I don’t think we’ll know the true definition of zero-Covid for a long time because things have changed and evolved so quickly in the last couple of weeks,” said Eddie Cheng, head of multi-asset portfolio management at Allspring. Global investment.

The new easing “may add to strong demand for raw materials, but we also have to see how that develops,” Cheng said.

China’s “zero-covid” policies are heavily affecting the world’s second-largest economy. Services activity contracted to a six-month low in November.

Market sentiment in Europe is still under pressure from “some inflationary forces”, particularly the region’s energy crisis.

Eurozone business activity fell for a fifth straight month in November, as final PMI data showed the economy heading into a moderate recession.

See also  Steelers at Bengals Score: Live Updates, Game Stats, Highlights, Analysis for Week 1 AFC North Showdown

A strong U.S. payrolls report for November weighed on Wall Street on Friday.

The euro was up 0.2% against the dollar at around $1.0557, while the U.S. dollar index was at 104.46, recovering after hopes of an easing of China’s lockdown sent it to a five-month low in the session.

Eurozone government bonds were little changed, with the German 10-year yield at 1.848%.

The European Central Bank should raise interest rates by 50 bps on December 15, French central bank president Francois Villeroy de Galhau said on Sunday, reinforcing expectations that the ECB will slow the pace of monetary tightening after 75 bp hikes.

Investors’ attention is focused on how quickly central banks can end their interest rate hike cycles. The Reserve Bank of Australia meets on Tuesday and is expected to raise rates by just 25 basis points. The Bank of Canada meets on Wednesday and is expected to raise rates by 50 bps.

Oil prices rose after OPEC+ countries kept their production targets steady.

A Group of Seven price cap on Russian offshore oil came into effect on Monday as the West tried to curb Moscow’s ability to finance its war in Ukraine. Russia has said it will not abide by the measure, even if it has to cut production.

Reporting by Elizabeth Howcroft Editing by Peter Graf

Our Standards: Thomson Reuters Trust Principles.

Leave a Reply

Your email address will not be published.