MARKET WRAPS
Stocks:
European stocks were steady on Wednesday as investors continued to assess the implications of China’s easing of Covid-19 restrictions on global growth and inflation.
A full reopening of China could offer a much-needed and timely boost to the global economy, SPI Asset Management said. At the same time, strong demand from China for raw materials and energy as its economic growth quickens in the first quarter may push up commodity prices, which could be a worry for central banks, SPI added.
Federal Reserve interest-rate policy uncertainty, inflation, growth and the prospect of a recession in 2023 are dominating the market’s focus during the final trading days of the year, according to SPI.
“Investors hoping for a year-end rally are likely disappointed as holiday cheer seems in short supply.”
U.S. Markets:
Stock futures edged higher while bonds rallied, with the yield on the benchmark 10-year Treasury note falling to 3.830%, from 3.857% on Tuesday.
Stocks on the Move
Southwest Airlines declined 0.6% in premarket trading as the carrier said it would limit new bookings on the planes it plans to fly in the coming days following thousands of flight cancelations over the Christmas weekend.
Tesla was 2.8% lower in premarket trading after its shares tumbled on Tuesday. Concerns about demand for new Tesla vehicles looked to be the biggest reason for the stock’s recent steep declines.
Energy:
Crude futures prices edged lower despite Russia making good on its pledge to ban oil sales to nations behind a price cap.
Read Russia Bans Sales of Oil to Countries Imposing Price Cap
Analysts said investors have been trying unsuccessfully for months to gauge exactly when the Chinese economy may emerge forcefully from Covid lockdowns, which could give a huge boost to overall global oil demand.
At the same time, U.S. economic uncertainty is also a problem for oil investors as the Fed overtly aims to slow the economy and curb demand as a way to solve the inflation problem.
Metals:
Base metals made solid gains as the LME reopened, with prices lifted by China’s decision over the weekend to relax Covid-19 restrictions on inbound travelers, a boost to demand hopes.
“The assumption is being made that the influx of tourists and no doubt business travelers will kick start the economy which in my view is a little optimistic to say the least,” Kingdom Futures said.
DOW JONES NEWSPLUS
EMEA HEADLINES
Russia Bans Sales of Oil to Countries Imposing Price Cap
Russia on Tuesday banned the sale of its oil and petroleum products to countries that put a cap on their sales price, in a move that threatened more uncertainty ahead for global energy markets.
The Kremlin’s action is an attempt to undermine a plan by the U.S. and its allies to bar the shipping, financing or insuring of seaborne Russian crude unless it is sold for $60 a barrel or less-a sanction leveled in response to Russia’s invasion of neighboring Ukraine.
Moscow and Kyiv Battle for Towns in Ukraine’s East
LVIV, Ukraine-Heavy fighting continued on Tuesday in eastern Ukraine, where Russia is pushing to seize the city of Bakhmut while Ukraine presses to wrestle back parts of the Luhansk region that Moscow has held for months.
Ukrainian President Volodymyr Zelensky, in a late-night address on Monday, described the situation in the east as “difficult and painful” but said Russia was expending substantial resources to achieve only incremental advances on the battlefield.
GLOBAL NEWS
Hong Kong Scraps Required PCR Covid Test for Arrivals
Hong Kong on Wednesday scrapped a requirement that all inbound travelers must undergo a PCR Covid-19 test, effective Thursday, the latest easing of the city’s pandemic policy.
Hong Kong will also stop requiring vaccine passes, which are needed to enter some public venues, the government said at a press briefing. The local government will continue to push for high vaccination rates, Hong Kong Chief Executive John Lee said at the briefing. He added that Hong Kong is planning to reopen its border with mainland China by Jan. 15.
U.S. Weighs New Precautionary Measures for Travelers From China
The Biden administration is weighing new precautionary measures for travelers entering the U.S. from China, according to American officials, as sales of air tickets out of China soared following Beijing’s decision to reopen its borders to international travel for the first time in almost three years.
The officials declined to lay out in detail which policies the administration is considering, but they pointed to Japan and Malaysia as potential models for the types of measures that could be put in place. On Tuesday, Japanese Prime Minister Fumio Kishida said the country will require a negative Covid-19 test upon arrival for travelers from China due to the rapid spread of the virus there.
Holiday Retail Sales Jumped, Mastercard Says. Why the Outlook Might Be More Muted.
Retail sales jumped nearly 8% this holiday season, new credit card numbers show. But it may be too early to give Santa Claus a pat on the back because the increase barely outpaced the inflation rate.
Mastercard SpendingPulse estimates that retail sales grew 7.6% year over year from Nov. 1 to Dec. 24, excluding automotive sales, surpassing its previous forecast for a 7.1% increase. The company compiles data from both in-store and online sales.
Write to paul.larkins@dowjones.com
Write to us at newsletters@dowjones.com
We offer an enhanced version of this briefing that is optimized for viewing on mobile devices and sent directly to your email inbox. If you would like to sign up, please go to https://newsplus.wsj.com/subscriptions.
This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
December 28, 2022 05:45 ET (10:45 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.
Read More: European Midday Briefing: Inflation Worries Balance China Covid Cheer