# Global stocks close in on 4-week highs, oil rises on hopes of ‘soft landing’
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-01-10
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Global Stocks Surge After China Reopens Borders - Reuters
Meta Description: World stocks surged as China reopened its borders, while Treasury yields dipped. Investors await Fed Chair Powell's speech and inflation data.
URL: https://financedigest.com/global-stocks-close-in-on-4-week-highs-oil-rises-on-hopes-of-soft-landinghtml

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xBy David Randall

NEW YORK (Reuters) -World stocks rallied on Monday to their highest levels since mid-December after China reopened its borders while benchmark Treasury yields drifted lower as investors scaled back expectations for further rate hikes by the Federal Reserve.

The gains were broad across global equity markets, with Europe’s STOXX 600 near a one-month high and emerging market stocks up 2.4% on the day. MSCI’s broadest index of Asia-Pacific shares outside Japan rose to its highest in more than six months after China reopened its borders, [bolstering the outlook for the global](https://www.financedigest.com/sp-global-acquires-firm-to-bolster-capability-to-track-commodity-shipments.html "S&P Global acquires firm to bolster capability to track commodity shipments") economy.

Wall Street’s benchmark indexes gave up broad earlier gains to finish mixed ahead of an expected speech by Fed Chair Jerome Powell on Tuesday and [inflation data](https://www.financedigest.com/oil-jumps-on-lower-than-expected-us-inflation-data.html "Oil jumps on lower-than-expected US inflation data") on Thursday.

What happens to claims and the labor market will also help determine whether the forthcoming [‘landing’ is soft](https://www.financedigest.com/stocks-dollar-gain-on-soft-landing-hopes.html "Stocks, dollar gain on soft landing hopes") or hard,” said Alex Pelle, U.S. economist at Mizuho Securities.

A soft landing is the ideal Fed policy goal after raising interest rates, a situation in which [inflation slows but there are not enough job](https://www.financedigest.com/stocks-mixed-dollar-gains-after-robust-inflation-jobs-data.html "Stocks mixed, dollar gains after robust inflation, jobs data") losses to trigger a recession.

[Global equities](https://www.financedigest.com/global-equities-gain-as-rising-bond-yields-pressure-gold.html "Global equities gain, as rising bond yields pressure gold") surged on Friday following U.S. jobs [data that showed a jump in the workforce and easing](https://www.financedigest.com/britain-plans-new-data-rules-to-ease-compliance-burden.html "Britain plans new data rules to ease compliance burden") wage growth. This, along with data pointing to a U.S. service sector contraction, was interpreted by investors as an indication the [Fed could become less hawkish](https://www.financedigest.com/stocks-sag-as-hawkish-fed-cools-china-rally-awaits-us-jobs-data.html "Stocks sag as hawkish Fed cools China rally; awaits US jobs data").

On [Wall Street](https://www.financedigest.com/wall-street-stocks-power-higher-as-treasury-yields-and-dollar-ease.html "Wall Street stocks power higher as Treasury yields and dollar ease"), the Dow Jones Industrial Average fell 112.96 points, or 0.34%, to 33,517.65, the S&P 500 lost 2.99 points, or 0.08%, to 3,892.09 and the Nasdaq Composite added 66.36 points, or 0.63%, to 10,635.65.

MSCI’s gauge of [stocks across the globe gained](https://www.financedigest.com/oil-gains-as-russian-supply-cuts-temper-concerns-over-rate-hikes-high-stocks.html "Oil gains as Russian supply cuts temper concerns over rate hikes, high stocks") 0.71% after being up as much as 1.5% earlier in the day.

Money [markets were pricing](https://www.financedigest.com/uk-housing-market-may-face-perfect-storm-as-mortgage-rates-rise-house-prices-drop.html "UK housing market may face perfect storm as mortgage rates rise, house prices drop") in a 25% chance of a half-point U.S. [rate hike in February](https://www.financedigest.com/uk-inflation-rate-unexpectedly-rises-to-10-4-in-february.html "UK inflation rate unexpectedly rises to 10.4% in February"), down from around 50% a month ago. [Investors will look to Thursday’s CPI data for further clues as to the Fed’s](https://www.financedigest.com/oil-steadies-after-dipping-on-china-outlook-investors-await-fed-clues.html "Oil steadies after dipping on China outlook; investors await Fed clues") next move.

The U.S. dollar index was down around 0.7%, [near its lowest in seven months](https://www.financedigest.com/oil-holds-steady-near-four-month-high-on-opec-cuts.html "Oil holds steady near four-month high on OPEC+ cuts"), after it dropped 1.2% on Friday.

In bond markets, European government bond [yields rose in a reversal after the previous weeks’ sharp falls](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling"). Germany’s benchmark 10-year government [bond yield](https://www.financedigest.com/wall-st-stocks-fall-bond-yields-rise-as-china-drops-quarantine-rule.html "Wall St stocks fall, bond yields rise as China drops quarantine rule") was up 4 basis points at 2.252%.

The [yield on 10-year Treasury](https://www.financedigest.com/wall-st-flutters-treasury-yields-ease-as-powell-resumes-testimony.html "Wall St flutters, Treasury yields ease as Powell resumes testimony") notes was down 4.1 basis points to 3.530%. Bond yields move in the opposite [direction of prices](https://www.financedigest.com/immediate-lift-of-oxford-property-prices-to-result-from-new-direct-high-speed-rail-connection-with-london.html "“Immediate lift” of Oxford property prices to result from new direct high speed rail connection with London").

Investors are operating under the assumption that once the Fed pauses, the only next possible outcome would be a [cut – and if futures pricing](https://www.financedigest.com/tesla-posts-record-quarterly-deliveries-after-price-cuts-up-4-from-q4.html "Tesla posts record quarterly deliveries after price cuts, up 4% from Q4") is to be believed, the market sees the first cuts by year-end,” said Ian Lyngen, head of U.S. [rates strategy at BMO Capital Markets](https://www.financedigest.com/no-santa-rally-for-markets-as-central-banks-dampen-peak-rate-hopes.html "No Santa rally for markets as central banks dampen peak rate hopes").

U.S. crude recently rose 1.41% to $74.81 per barrel and Brent was at $79.73, up 1.48% on the day.

(Reporting by David Randall; Editing by Susan Fenton, Will Dunham and Chris Reese)


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