Investors in Europe remain in a cautious mood on Tuesday as they await a huge influx of economic data in the coming days, while US futures are also pointing to modest gains ahead of the open.
Stocks in China soared after a difficult start to the week, on the hope that the country’s zero-Covid policy stance may be relaxed further. That had been the expectation in recent weeks, with a modest softening recently seen being followed by a more substantial shift in the spring.
But protests in recent days on the back of record Covid cases and tighter restrictions could have gone either way and that made investors extremely anxious on Monday. While I can imagine the path from zero-Covid to zero restrictions will be long and full of potholes and hurdles, the response to the unrest has appeared more promising than feared.
It may well be that the leadership had already been gauging the public mood on restrictions and had, as has been rumoured, already been planning its exit strategy which recent comments align with. Either way, it appears zero-Covid has reached a crossroads and the direction of travel now will determine investor appetite toward Chinese stocks going into 2023. Today’s rebound suggests there’s some optimism.
Choppy and vulnerable
Bitcoin has also reversed its Monday losses, rallying 1.5% so far today. The cryptocurrency has remained volatile in the aftermath of another plunge following the FTX collapse and now trades more than 75% from its highs just over a year ago. Even now it remains vulnerable as we continue to discover what the full contagion effect will be and what else will be uncovered.
For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/
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