The rumour mill was powering the FTSE 100 forward on Friday with investors jumping on more speculation about a potential Chinese economic reopening.
Earlier this week, global equities rallied after social media posts suggested the Chinese were creating a committee to end zero covid policy and reopen the economy.
“Any indication that some rules could be relaxed would be an immediate dose of grease in the jarring cogs of China’s economy,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
The optimism around China was compounded by better than expected US jobs numbers on Friday showing the US economy was still powering ahead despite economic headwinds.
Non-farm payrolls grew by +261k in October, yet another month of stellar job growth.
— Justin Wolfers (@JustinWolfers) November 4, 2022
Past two months show revisions of +52k for September and -23k for August, so this is an even stronger report.
Unemployment rate rose a tick to 3.7%.
This is a very strong economy.
FTSE 100 Miners
The FTSE 100 miners were inevitably the top gainers on Friday as commodity prices surged on hopes of a rebound in demand from China.
Anglo American stormed to the top of the leaderboard gaining nearly 10% with Antofagasta adding over 7% and Rio Tinto 6.5% at the time of writing.
Prudential – gaining 8.5% – has a significant Asian focused business and will benefit from a relaxation in China restrictions.
The strong performance in the FTSE 100’s China-exposed stocks came after a bumper session in Chinese equities overnight.
“The Hang Seng index recorded its biggest weekly gain in 11 years, rising 8.7% to 16,161. A good chunk of those gains came on Friday as stocks jumped in anticipation that the Chinese government would relax its zero-Covid policy from March next year,” said Russ Mould, investment director at AJ Bell.
“Prior to this week’s rally, Asian stocks had struggled this year amid fears about a sharp slowdown in economic growth partially caused by stringent Covid lockdown rules in China. Even after the rebound this week, Hong Kong’s index remains 30.6% lower year-to-date.”