(Bloomberg) — Stocks surged Wednesday and U.S. and European futures rose after China moved to ease a range of concerns spanning regulation to overseas listings, lifting sentiment after weeks of worries about war and high inflation.
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An Asia-Pacific share gauge jumped the most since 2020, a measure tracking mainland companies listed in Hong Kong posted the biggest gain since the global financial crisis and a Chinese tech index soared a record 20%. European futures added 2%, while S&P 500 and Nasdaq 100 contracts also climbed.
China vowed policies to boost financial markets and spur economic growth as it attempted to ease fears on risks related to the ailing property sector, overseas listings and a clampdown on internet firms. That touched on many of the concerns that have soured China’s outlook for some time.
Equities in China and Hong Kong had been under pressure — shedding about $1.5 trillion combined over the first two days this week — in part on speculation that Beijing’s ties with Russia raise the risk of a U.S. backlash.
“The market was indeed oversold, irrational, in the dramatic rout, so real money is back doing bottom fishing,” said Castor Pang, head of research at Core Pacific Yamaichi.
West Texas Intermediate crude oil advanced, while staying below $100 a barrel. Treasuries fell, taking the 30-year yield to the highest since 2019 ahead of the Federal Reserve decision. The yuan strengthened and a dollar gauge dipped.
A quarter-point Fed rate increase, the first since 2018, to fight high inflation is widely anticipated but there’s less certainty beyond that. While markets expect a total of seven such moves this year, policy makers also have to factor in growth risks emanating from Russia’s invasion of Ukraine.
“The confluence of events leading in to this meeting puts policy makers in a very unenviable position,” Matt Rowe, executive director at Nomura Securities International Inc., said on Bloomberg Television. “It’s being publicly debated whether if you create a recession to push the number down to 2%, is that actually a policy error?” he added, referring to inflation.
In the latest developments from the conflict, Ukraine and Russia are due to resume talks Wednesday. A key adviser to Ukrainian President Volodymyr Zelenskiy called the negotiations “difficult” but said there is room for compromise. In Russia, President Vladimir Putin said Ukraine’s leadership was not “serious” about resolving the conflict.
Russia has begun the process of paying $117 million in interest due Wednesday on dollar bonds. Investors are waiting to see if a default occurs. The coupon payments have a 30-day grace period until any default could potentially be called.
Elsewhere, nickel trading is due to resume on the London Metal Exchange, over a week after being suspended amid a historic short squeeze.
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Here are some key events to watch this week:
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EIA crude oil inventory report, Wednesday
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FOMC rate decision and Fed Chair Jerome Powell news conference, Wednesday
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Bank of England rate decision, Thursday
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ECB President Christine Lagarde, Executive Board member Isabel Schnabel, Governing Council member Ignazio Visco and Chief Economist Philip Lane speak at a conference, Thursday
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Bank of Japan rate decision, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.8% as of 7:37 a.m. in London. The S&P 500 rose 2.1%
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Nasdaq 100 futures rose 1.2%. The Nasdaq 100 rose 3.2%
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Japan’s Topix index added 1.5%
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Australia’s S&P/ASX 200 index rose 1.1%
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South Korea’s Kospi index climbed 1.4%
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Hong Kong’s Hang Seng index increased 8.4%
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China’s Shanghai Composite index added 3.5%
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Euro Stoxx 50 futures increased 2.1%
Currencies
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The Bloomberg Dollar Spot Index fell 0.1%
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The euro was at $1.0962
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The Japanese yen was at 118.37 per dollar
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The offshore yuan was at 6.3596 per dollar, up 0.3%
Bonds
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The yield on 10-year Treasuries was at 2.19%, up five basis points
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Australia’s 10-year yield fell two basis points to 2.50%
Commodities
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West Texas Intermediate crude was at $98.58 a barrel, up 2.2%
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Gold was at $1,915.97 an ounce
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