Global markets headed for a positive weekend after US inflation

(Paris) A relaxation of several measures against COVID-19 in China and the sharper than expected slowdown in US inflation helped markets on Friday, despite fears over the cryptocurrency sector.

Updated yesterday at 12:07 p.m.

In Europe, most European indices finished in the green. Paris gained 0.58%, Milan 0.25% and Frankfurt 0.56%, the German place signing its best weekly progression since March 2022.

By contrast, London fell 0.78%, while UK GDP contracted 0.2% in the third quarter, a sign that the economy may already be in recession.

In New York, the trend was mixed following a euphoric session, where the NASDAQ soared more than 7%. Around 11:50 a.m., the NASDAQ was up 0.77%, the S&P 500 0.10%, while the Dow Jones fell 0.69%.

The Hong Kong Stock Exchange index, which is dominated by technology, also took off by more than 7%.

Thursday’s release of a sharper-than-expected slowdown in inflation (to 7.7%) in the United States in October sparked a frenzy of buy-equity orders, a slump in bond yields State and an ebb of the dollar.

The announcement on Friday of a relaxation of certain measures against COVID-19 in China, in particular a reduction of the quarantine on arrival in the country from ten to eight days, boosted the markets.

“It’s hard not to think once again that the markets seem to be getting a bit ahead of themselves, given that the quarantine period in China is still quite long and the infection rates of COVID- 19 are rising and not falling,” said CMC Markets analyst Michael Hewson.

Ditto for inflation, “the reaction to this figure seems a bit extreme, even exaggerated, but it must be recognized that investors have waited a long time for this opportunity and that a lot of negativity has been priced in during this time”, comments Craig Erlam, analyst from Oanda.

With rising prices decelerating and a slowing economy, investors are hoping the US central bank eases off its monetary tightening cycle.

However on the bond market, European sovereign interest rates, which had collapsed the day before, rose to levels close to those where they were before the publication of inflation figures on Thursday. The German 10-year yield was worth 2.15%. The US market is closed for Veterans Day.

Slack on health

With the renewed appetite for risk, so-called defensive stocks fell, particularly those in the health sector: Sanofi lost 5.22%, UCB Pharma 6.08%, Novartis 4% and AstraZeneca 5.02%. . GSK fell 6.01%, “following a downgrading of UBS’s rating, due to uncertainty about future levels of sales of the Shingrix vaccine”, explains Michael Hewson.

In New York, Johnson & Johnson fell 3.07%, Merck 3.18% and Eli Lilly 4.42%.

On the side of currencies and oil

The dollar continued its decline on Friday, reaching a three-month low against the euro.

In two sessions, the Dollar index, which compares the greenback to a basket of other major currencies, plummeted by 3.38%.

The American currency lost 1.17% against the euro at 1.0330 dollars.

The British pound fell against the euro by 0.59% to 87.66 pence, weighed down by the contraction of British GDP.

Investors were watching the possible implications of the troubles in the cryptocurrency sector. The FTX cryptocurrency platform, in turmoil for a week, declared bankruptcy, and its leader Sam Bankman-Fried resigned on Friday.

After this announcement, bitcoin fell 6.07% to $16,725.

Oil prices were supported by the easing of Chinese anti-COVID-19 restrictions.

Around 11:45 a.m., a barrel of Brent from the North Sea for delivery in January 2023 gained 2.22% to 95.76 dollars. A barrel of US West Texas Intermediate (WTI) for December delivery appreciated 2.58% to 88.69 dollars.

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