• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Investing Stocks rally as investors bet Chinese restrictions to loosen, but inflation remains enemy number one
Investing

Stocks rally as investors bet Chinese restrictions to loosen, but inflation remains enemy number one

by November 29, 2022
by November 29, 2022 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Maybe it’s not all pain.

Stocks are rising this afternoon, as investors bet that Beijing will press on with plans to ease its strict COVID-19 policies.

The year has been turbulent thus far for equities, to say the least. Following an insane pandemic period propelled by basement-level interest rates and a warm money printer, stocks have regressed significantly this year as seemingly every variable has turned negative.

There is Putin’s war in Ukraine, choking the energy market and provoking chat of blackouts in Europe this winter. It is not just energy rising, however, as inflation numbers worldwide have mooned, with the UK still sitting in double digits.

With central banks forced to hike rates in response to the spiralling inflation, liquidity has been pulled out from under investors’ feet, and stock prices have cratered.

Chinese lockdown concerns had hurt stocks

The last few days has brought fears for investors that one of the most ominous macro variables was returning with a vengeance: COVID lockdowns.

China is facing widespread protests, with businesses closing down and strict quarantining introduced in Shanghai, as the Chinese government reaffirms its commitment to zero-COVID policy. In addition to the phrase “zero-COVID” triggering my PTSD, the trouble had sparked equities to move downward to open the week.

Now, though, they’re back. The moves in European stocks followed Chinese stocks pumping aggressively upward, as the market bets that a swifter reopening in China will come than was otherwise priced in. China’s CSI Index jumped 3.1%, while Hong Kong’s Hang Seng index jumped up more than 5%.

The FTSE 100 has just hit a three-month high as I type this, trading at £7526, in what has been a strong surge for the British index, which is now trading above levels seen when Lizz Truss commenced her disastrous reign at the start of September, something I wrote a deep dive for here.

Inflation remains key figure

While the COVID lockdown situation is one to monitor, it remains secondary to inflation when it comes to ultimately deciding where the market goes. As I wrote eight months ago, the market won’t transition until inflation can be checked off.

Inflation readings remain highly elevated, including in the US, where the most recent CPI came in at 7.7% – lower than October’s discouragingly high number, but still bloated. Numbers like that have almost become normalised, given they were flirting with double digits not long ago, but that remains a grave problem.

I have written about my pessimism regarding the state of the economy plenty, and I don’t feel we are near a turning point yet, as we head into winter. We won’t be leaving this new paradigm of rising interest rates anytime soon. This was reaffirmed on Monday when the president of the Federal Reserve Bank of New York, John Williams, pointed towards unemployment as likely to rise towards 4.5 to 5% before the end of the year.

At the current employment figure of 3.7%, the labour market has yet to be truly shook by this tightening economy. Against this context, the worry about inflation remains high, and the likelihood of tightening monetary policy remains. And we won’t see a recovery until the economy can shrug these off.

The post Stocks rally as investors bet Chinese restrictions to loosen, but inflation remains enemy number one appeared first on Invezz.

You Might Also Like
  • New Grindr stock ticker, GRND, after merger with Tiga is now listed on eToro
  • Put/Call Parity
  • Index Options vs. Stock Options: What’s The Difference?
  • ‘There is a lot that’s underestimated at Biogen’: CEO Viehbacher
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Chipping Away at Corporate Welfare
next post
Consumer Expectations Remained at Recessionary Levels in November

You may also like

The Importance  of Proactive Hedging in Options Trading

March 23, 2023

Why New Traders Struggle: 3 Key Concepts New Traders Never...

September 1, 2023

What made Designer Brands stock tank 25% on Thursday?

December 1, 2022

Top 3 risk events for FX traders in the second...

January 8, 2023

Two old tech stocks Jim Cramer recommends owning for 2023

December 22, 2022

JD Sports shares collapsed in 2022: Is it a buy...

December 21, 2022

Victoria’s Secret stock is up 15% on Wednesday: explore why

January 11, 2023

Carvana stock crashed another 45% on Wednesday: here’s why

December 7, 2022

European stocks rise to highest point since May 2022

January 10, 2023

Jim Cramer disagrees with Jamie Dimon on recession

December 6, 2022

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • The Best Five Sectors, #24

      June 23, 2025
    • Lagging Mid-cap ETF Hits its Moment of Truth

      June 23, 2025
    • US Strikes Iran: What Comes Next For Stocks?

      June 22, 2025
    • The NASDAQ 100, On The Brink Of A Breakout, Needs Help From This Group

      June 21, 2025
    • Tesla agrees to first deal to build China’s largest grid-scale battery power plant

      June 21, 2025

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 3,602 views
    • 2

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,881 views
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,582 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,543 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,421 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,143)
    • Investing (538)
    • Stock (2,625)

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 2

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • The Best Five Sectors, #24

      June 23, 2025
    • Lagging Mid-cap ETF Hits its Moment of Truth

      June 23, 2025
    • US Strikes Iran: What Comes Next For Stocks?

      June 22, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,143)
    • Investing (538)
    • Stock (2,625)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    25+ US economy statistics: forecast, trends...

    January 9, 2023

    Harnessing Monte Carlo Simulations for Options...

    October 22, 2024

    DAX index forecast for January 2023

    December 20, 2022
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here