Morning deal: Labor markets get a boost from China

A preview of the day ahead in US and global markets by Mike Dolan.

With an eye on the US jobs report at the end of a austere week of interest rate hikes, global markets were boosted by another slightly mysterious surge in Chinese stocks.

For the third time in just over a week, Chinese and Hong Kong stocks have surged sharply from the bottom of their disastrous year on a variety of sketchy reports and vague hopes that the country may soon ease its draconian zero COVID curbs that undermine the economy. None of this information has yet been confirmed, but some former officials appeared to encourage speculation on Friday.

Some investors clearly took it seriously. The Hang Seng (.HSI) jumped 7% and was heading for a weekly gain of more than 10% for the first time since November 2011. The Shanghai Composite (.SSEC) rose 2.7% and was heading for a weekly gain of 5.6%, the largest in more than two years.

The sudden increase was helped by reports that the first US inspections of audit documents of Chinese companies listed in the United States – a long-standing point of regulatory tension and risk – ended earlier than expected. Others pointed to the visit to Beijing of German Chancellor Olaf Scholz and Chinese President Xi Jinping on Friday touted the need for greater cooperation between China and Germany in “times of change and turmoil”.

To gauge the significance of a COVID rule change, UK hedge fund firm Man Group (EMG.L) said it plans to expand into China after the country eases its tough restrictions. But that’s far from a consensus – The Wall Street Journal reported on Thursday that Tiger Global Management suspended investment in Chinese stocks after Xi cemented his grip on power last month.

However, U.S. equity futures edged higher ahead of the open after another round of heavy index losses on interest rate hike fears on Thursday.

The October US jobs report would be another key to gauge how hawkish the Federal Reserve plans to be next year. U.S. employers likely hired another 200,000 workers last month, even believing it would be the fewest in nearly two years in October, and wages likely rose at a moderate pace.

Big Tech’s bumpy earnings season continued to hold negative surprises. PayPal (PYPL.O) shares fell more than 10% after the bell on Thursday after the online payments company cut its revenue growth forecast in anticipation of an economic slowdown and saw little e-commerce growth in the quarter holidays.

And all is not rosy on the labor market. Twitter will notify employees by email on Friday if they have been laid off, temporarily closing its offices and barring staff access, after a week of uncertainty over the company’s future under new owner Elon Musk.

The pound clawed back ground after its biggest one-day loss on Thursday since Britain’s botched budget in late September sent it to historic lows. The Bank of England accompanied its biggest interest rate hike in 33 years by insisting that markets overestimated how much it would raise rates next year, an implied spike in the policy rate which, according to it would plunge the economy into its longest recession on record.

Elsewhere, the wealthy Group of Seven nations and Australia have agreed to set a fixed price when they finalize a price cap on Russian oil later this month, rather than adopt a floating rate, officials said. sources Thursday.

Key developments that should provide more direction to US markets later on Friday:

* Boston Fed President Susan Collins speaks

* US October Jobs Report, Canada October Jobs Report,

* Profits of American companies: Hershey, Dominion Energy, Duke Energy, Cardinal Health, PPL, Cboe Global Markets, Evergy, AES

Chinese stocks
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By Mike Dolan, editing by Ana Nicolaci da Costa; [email protected]. Twitter: @ReutersMikeD

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The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and non-partisanship by principles of trust.

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