Global stocks rise as China points to stimulus for Shanghai

Global markets have been boosted by the looming relaxation of some Covid-19 restrictions in China. Shanghai Vice Mayor Wu Qing said at the weekend that authorities would relax the conditions under which businesses can resume work this week, and the city government has drawn up a 50-point plan to speed up the economic recovery. The new China News Agency (Xinhua) said that the measures include tax cuts for companies and subsidies for the purchase of electric cars.

S&P 500 futures are up 0.6% by noon ET. The US stock market is set to reopen on Tuesday, as is the Treasury market. Government bond yields slipped from their 2022 highs in the run-up to Friday’s close, helping lift stocks after a weeks-long loss. S&P 500 . Index A seven-week losing streak was cut short Friday posted its biggest weekly gain since November.

However, some money managers warn that the recovery in stock and bond prices could be fleeting short of a long-term downturn. They say most of the factors that contributed to this year’s losses – the war in Ukraine, high interest rates set by the Federal Reserve and a sluggish economy – remain.

“We are on the cusp of seeing a bear market rally — or we’re in the midst of it,” said Daniel Egger, chief investment officer at St Gotthard Fund Management.

Mr. Iger said yields will start to rise again and expectations for corporate earnings are too high, while profit margins are under pressure from higher commodity prices. “This does not bode well for stocks,” he said.

On the economic front, the data showed an acceleration of inflation in the major European economies. Germany’s annual inflation rate reached 8.7% this month, according to preliminary figures, the fastest pace since 1973. In Spain, consumer prices rose 8.5% over the year, up from the 8.3% rate recorded in April.

European luxury goods stocks, which benefited from Chinese demand, benefited from the prospect of lighter closings.

Hermes International

3.9% profit and

Compagnie Financière Richemont

It rose 2.9%.

L’OrealAnd the

The French personal care company, gained 2.1% and

LVMH Moët Hennessy Louis Vuitton

Added 2.6%.

In commodity markets, benchmark Brent crude futures rose 1.2% to $116.90 a barrel and touched their highest level in more than two months. Leaders of European Union members are due to meet on Monday and Tuesday, after diplomats over the weekend failed to conclude an agreement on sanctions that would limit Russian oil imports.

In Asia, the Shanghai Composite added 0.6% and the Hang Seng Index in Hong Kong jumped 2.1%.

In China, companies serving Chinese consumers have registered some of the biggest advances. Hot pot chain of restaurants

Haidilao International Holding Ltd.

brewer

China Resources Beer

(Holding) and Sportswear Company

Li Ning Co., Ltd..

rose between 8.2% and 11% in Hong Kong.

Chinese internet stocks have built higher from late last week, with the Hang Seng Technology Index up 3.9%. food delivery giant

Mituan

It jumped 6.8%. Chinese e-commerce platform

Pinduoduo . Company.

U.S.-traded shares on Friday posted better-than-expected quarterly earnings and revenue, after similarly strong results from

Alibaba Group Holdings Limited.

And the

Baidu Inc.

Michael Metcalfe, head of macro strategy at State Street Global Markets, said investors are hopeful that China has weathered the worst wave of Covid-19 in terms of lockdown severity and case numbers. That would reduce one of the forces driving the global economy into a period of low growth and high inflation, he said.

However, Mr. Metcalf said, inflation remains high in both Europe and the US, which keeps pressure on central banks to raise interest rates. “There is nothing we see in the current inflation trend that gives us any confidence,” he said.

Write to Joe Wallace at [email protected] and Dave Sebastian at [email protected]