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Markets bounce with eye on China congress

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TOKYO: Global shares were mostly higher on Monday as investors kept their eyes on a weeklong congress of China’s ruling political party in Beijing.

France’s CAC 40 inched up 0.5 percent in early trading to 5,961.27. Germany’s DAX gained 0.5 percent to 12,498.72. The United Kingdom’s FTSE 100 rose 0.5 percent to 6,894.84. The future for the Dow industrials was up 0.7 percent, while the contract for the S&P 500 climbed 0.9 percent.

These came just before Jeremy Hunt, the UK’s new chancellor of the exchequer, announced that he would ditch the market-shaking tax cuts announced by the government of Prime Minister Liz Truss through his predecessor Kwasi Kwarteng on September 23.

Since that announcement, the premier’s libertarian economic policies have triggered a financial crisis, an intervention by the Bank of England, multiple U-turns and Kwarteng’s firing.

In Asia, the 20th National Congress of the Communist Party of China already opened and is expected to reappoint President Xi Jinping as leader for the next five years. Analysts expect the meeting to reaffirm Xi’s grip on power and stronger state control over the economy. They expect no change to Beijing’s zero-Covid policy.

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“Fresh updates from China’s Party Congress are being scrutinized, with the emphasis on technological advancement and national security seemingly brought up as high priorities for China’s longer-term direction. Further decoupling from United States technology seems to be the story,” Yeap Jun Rong, a market strategist at IG in Singapore, said in a commentary.

Japan’s benchmark Nikkei 225 slipped 1.2 percent to finish at 26,775.79. Australia’s S&P/ASX 200 dipped 1.4 percent to 6,664.40. South Korea’s Kospi gained 0.3 percent to rebound to 2,219.71. Hong Kong’s Hang Seng rose 0.5 percent to 16,662.19, while the Shanghai Composite climbed 0.4 percent to 3,084.94. In Mumbai, the Sensex added 0.8 percent.

In currency trading, the US dollar rose to 148.64 yen from 148.63 yen. That’s a nearly 32-year low for the Japanese currency against the greenback.

Clifford Bennett, chief economist at ACY Securities, said the dollar was likely to continue rising as interest rates were pushed higher to counter inflation. That’s a hardship for countries facing steep increases in costs for imports and for debt repayments.

“The outlook is grim. The economic horizon is dark,” he said of the American economy. “The US dollar will continue to strengthen for the moment, particularly against other Western currencies.”

Meanwhile, Tokyo said Japan’s industrial production for August showed moderate signs of improvement said. Output rose 3.4 percent from the seventh month and 5.8 percent from a year earlier, according to Ministry of Economy, Trade and Industry data released on Monday.

Worries about inflation, though cooling in some parts of the economy around the world, remain overall. A report last week showing American consumers’ expectations for inflation was another signal that the Federal Reserve (Fed) may keep aggressively raising interest rates, although that strategy raises the risks of a recession.

The Fed has already raised its benchmark interest rate five times this year, with the last three increases by three-quarters of a percentage point. Wall Street expects another raise of three-quarters of a percentage point at its next meeting in November.

In energy trading, benchmark US crude added 95 cents to $86.56 a barrel in electronic trading on the New York Mercantile Exchange. US crude oil prices fell 3.9 percent on last Friday. Brent crude, the international standard, added $1.05 to $92.68 a barrel.