Markets nudged higher on Friday, after China eased its strict pandemic policies, which have roiled global supply chains. It built on the previous day’s surge, which investors said was driven by encouraging inflation trends.
The S&P 500 rose 0.5 percent in morning trading, after the latest reading of the Consumer Price Index on Thursday — which showed prices rising by less than expected in October — sparked a major rally.
The bullish sentiment was supported on Friday by a loosening of some pandemic policies in China, such as required quarantine times, even as the government remains committed to its “zero-Covid” policy. Those policies have weighed on financial markets around the globe, straining supply chains and stoking inflation.
Hong Kong’s Hang Seng Index rose 7.7 percent on Friday, its best one-day performance since March, while the mainland CSI 300 index rose 2.8 percent.
The moves gave another push to the stock market in the United States, after a bumper 5.5 percent gain for the S&P 500 on Thursday, the biggest increase for the index since October 2008.
Trading on Wall Street was more subdued on Friday, following Thursday’s “euphoria,” said Paul Christopher, the head of global market strategy at the Wells Fargo Investment Institute. While stock markets were open for trading on Friday, the bond market was closed for Veterans Day.
“Today may be a little more sober,” said Mr. Christopher. “It’s the hangover day where we realize yesterday was a little excessive.”
The fresh U.S. inflation numbers on Thursday prompted hopes among investors that inflation may have peaked, and solidified expectations that the Federal Reserve will soon begin to slow the pace of interest rate increases that have raised costs for companies and weighed on the stock market.
The Fed is now expected to raise interest rates by a half-point when it meets in December, less than the three-quarter-point increases at each of its four previous meetings. Investors also lowered their expectations for the peak in the Fed’s policy rate next year.
Some investors said that they believed the data paves the way for stock markets to rise over the coming weeks until the next major update on the health of the labor market in December.
However, Fed officials cautioned on Thursday that with inflation near 40-year highs, the Fed’s campaign to slow the economy through higher interest rates is still far from over.