The Chinese People's Political Consultative Conference and the National People's Congress, known as the "Two Sessions," will take place this weekend. During the event, the government's economic targets and fiscal budget will be discussed and approved, along with personnel changes. There is expected to be a further concentration of economic and financial power under the CCP, but recent moves suggest investors should not rush to conclusions. Investors should also pay attention to statements on sector-specific policies, such as property, consumption, and internet regulations, as well as policy stances on Taiwan. The post-Covid recovery has been positive but has a long way to go, especially for the service sector, mass markets, and young workers. Four policy expectations include support for consumption, measures to stabilise the property market, continued COVID-19 containment, and financial deleveraging.
The main boards rallied as Atlanta Fed President Raphael Bostic eased worries about aggressive rate hikes and reiterated a 25-basis-point increment. The week was riddled with strong economic data that has led to the market pricing in aggressive Fed rate hikes and lower earnings on Wall Street. However, Macy's and Salesforce reported positive quarterly earnings, pushing the indexes higher.
Gold prices rose 0.14% on Friday after a slight fall in a volatile trade on Thursday. It may be due to a dovish comment by a Fed official that drove an optimistic narrative in the commodity market. According to the World Gold Council, central banks also purchased 31 tonnes of gold in January, an increase of 16% from the previous month.
Oil prices stagnated due to concerns about rising interest rates but were boosted by renewed optimism over a rebound in Chinese demand. Both Brent oil and West Texas Intermediate crude futures were set to gain between 1.5% and 2% for the week. Despite positive news, oil prices remain under pressure due to a stronger dollar and concerns that rising interest rates will hurt crude demand.
The US dollar strengthened on Thursday as lower unemployment claims and growing labour costs suggested the Fed may be hawkish, but the greenback fell the next day on a Fed official's comment. The euro slid after data showed inflation in the euro zone wasn't as high as expected. The Bank of England Governor's remarks held back sterling. Investors are also waiting for China's National People's Congress meeting for post-COVID recovery policy guidance.