Asian, European Shares Edge Higher on China Optimism

Global equity markets are higher on Friday. Traders in Asia were impressed with China inflation data, which came in roughly in line with expectations. Meanwhile in Europe, the markets firmed as investors hoped for a Chinese economic recovery as COVID-19 curbs are relaxed, while assessing the prospects for global recession.

China’s Producer Prices Fell in November, While Consumer Prices Rose

China’s producer price index fell 1.3% in November compared to a year ago, extending its decline after shedding 1.3% in October, and slightly beating estimates for a 1.4% contraction in a Reuters poll.

The nation’s consumer price index rose 1.6% in November on an annualized basis, in line with expectations and easing from October’s reading of 2.1%.

Credit Suisse Says Inflation is Still Not a Problem in China

China’s inflation is likely to stay below 3% in the next 12 to 18 months, and the central bank is comfortable with this range, according to Jack Siu, Greater China chief investment officer at Credit Suisse.

“We don’t think CPI is an issue in China, in fact, it’s going to be remaining steady within this range of 1% to 3% in the foreseeable future,” he told CNBC’s “Street Signs Asia.”  Inflation soared in many economies, but consumer prices in China remained moderate due to weak demand.

But China is likely to see “a resurgence in consumer activity” in the coming six months as people get used to living with the virus after some back and forth in the reopening of the economy, Siu said.

“In the second quarter, we expect the GDP to rally to 6.1% – partly its base effects, partly because people are living more normally,” he said.

European Shares Rise as Industrials, Financials Gain

European shares inched higher on Friday as gains in industrial and financial stocks on China-led optimism offset weakness in the energy sector, while Credit Suisse climbed on news of a capital rise, according to Reuters.

The region-wide STOXX 600 Index was up 0.1% and appeared set to snap a five-day losing streak that was largely driven by concerns about an impending global recession due to sharp interest rate hikes by central banks, Reuters reported.

Industrial stocks such as Siemens AG were among the biggest boosts to the index, while some China-exposed financials such as Prudential Plc. Energy stocks led sectoral declines, falling 0.4% dragged down by a fall in shares of heavyweights such as Shell Plc and BP Plc.

Reuters is also reporting that Credit Suisse shares rose nearly 3% after the embattled bank hailed a “milestone” in its turnaround plan on Thursday after raising 2.4 billion Swiss francs ($2.39 billion) as part of a 4 billion franc cash call.