Investors are hopeful that China’s decision to fully reopen its borders will improve the outlook for global growth. This is why investors expect European stock markets to open higher on Monday.
At 02:00 ET (07:00 GMT), the DAX futures contract in Germany went up 0.2%, the CAC 40 futures contract in France went up 0.2%, and the FTSE 100 futures contract in the U.K. went up 0.1%.
Beijing took down its pandemic border controls on Sunday. Since the start of the COVID-19 pandemic, its border has been almost completely closed.
This is likely to give the country’s economy a boost, which would have an effect on a wider scale given China’s importance as a driver of growth in the region and as a key market for European exporters.
Analysts at Goldman Sachs said in a note that China looks good in terms of growth, policy, and inflation around the world in 2023.
On Friday, the mood around the world was also helped by strong U.S. job gains, slower wage growth, and a sharp drop in service-sector activity. This gave people hope that the Federal Reserve will slow its interest rate hikes again when it meets in February.
Back in Europe, Germany’s industrial production grew by 0.2% in November, which was better than the revised 0.4% drop the month before.
A survey from the German Economic Institute, which was released on Monday, shows that four out of ten German companies expect their business to shrink in 2023.
“There is less of a chance of a gas shortage in the winter of 2022/23 than there was in the summer of 2022, and energy prices have also gone down since then.” But they are still high, and production problems can’t be ruled out, according to the German Economic Institute.
Later in the session, the Eurozone unemployment rate for November will be released.
This week, the main U.S. banks, including Wells Fargo (NYSE: WFC), Citigroup (NYSE: C), Bank of America (NYSE: BAC), and JPMorgan (NYSE: JPM), will start releasing their fourth quarter earnings. This will put the banking sector in the spotlight.
Friday, oil prices went up because China’s borders reopened for the first time in three years. This was good news for fuel demand growth in China, which is the world’s largest crude importer.
Last week, both Brent and WTI fell more than 8%. This was their biggest weekly drop at the start of a year since 2016 and came amid worries about a global recession.
By 2:00 p.m. ET, U.S. crude futures had gone up 1.5% to $74.84 per barrel, while the Brent contract had gone up 1.4% to $79.66 per barrel.
Also, gold futures went up 0.7% to $1,882.25/oz, and EUR/USD went up 0.4% to 1.0684.