China’s shift boosts stocks amid political risks: Markets Wrap


(Bloomberg) — A shift in China’s monetary stance provided a welcome boost for markets at the start of a week set to be dominated by political upheaval from the Middle East to South Korea and France, as well interest-rate decisions from major central banks.

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China’s top leaders announced they will embrace a “moderately loose” strategy next year, in a sign of greater easing ahead that will likely be hailed by investors hungry for more stimulus. All eyes are now on the Central Economic Work Conference due to start on Wednesday, for signals of more fiscal support. An index of Asian stocks advanced, with Hong Kong’s benchmark jumping 2.8%. The offshore yuan erased losses to trade 0.1% stronger.

“The somewhat looser monetary policy stance by the Politburo is welcome news, though it won’t materially change the situation for the Chinese economy,” said Joachim Klement, head of strategy, economics and ESG at Panmure Liberum. “What is needed is substantially more fiscal stimulus that is supported by a looser monetary policy.”

Europe’s Stoxx 600 benchmark is on track for an eighth straight day of gains, the longest streak since May, as investors position for another rate cut by the European Central Bank. US equity futures edged higher. Treasury yields and the dollar were steady.

ECB policymakers will set interest rates in Frankfurt this week for the first time since governments in Paris and Berlin both collapsed over budget talks. In addition to the ECB, the Bank of Canada and Swiss National Bank are expected to ease policy, while Australia’s central bank will likely keep its key interest rate on hold amid indications the nation’s economy is beginning to soften.

Crude oil rose after the toppling of President Bashar al-Assad’s regime unsettled an already restive Middle East. Investors are also bracing for the European Central Bank’s rates decision and key US inflation data. Political uncertainties remain in the foreground, with Korea risking prolonged political impasse and Assad’s downfall leaving a power vacuum in the Middle East.

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Korean markets extended their declines as opposition lawmakers said they would push for another impeachment vote on President Yoon Suk Yeol after he survived the first one. Yoon was banned from leaving the nation, Yonhap News reported. The won fell about 1% against the dollar.



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