Shanghai lifts blockade, Eurozone CPI, EU summit

© Reuters

Jeffrey Smith – The U.S. Memorial Day holiday meant a quiet session for world markets, but Chinese and European stocks were higher after Shanghai announced the lifting of more COVID-19 lockdown measures. Euro zone inflation appeared to be higher than expected in May, but the ECB’s chief economist again ruled out a 0.5 percentage point rate hike in July. EU leaders will meet at a later date but are trying to overcome Hungary’s opposition to a proposal to ban Russian oil imports from the end of this year. The weakening of the UK economy has finally – but only gradually – affected the housing market. Here’s what you need to know about the financial markets on Monday, May 30.

1. China reopens

Shanghai emerges from a COVID-19 lockdown, announcing the resumption of public transport services from June 1.

The city also said it would lift restrictions on private cars and allow access to and from residential communities — with the exception of residential complexes and other designated control areas in medium-to-high-risk areas — from the same date.

The restrictions on China’s most important economic center have been in place for more than two months and have sparked a sharp drop in local economic output and a new surge in global supply chain problems.

Authorities in the capital said the COVID-19 outbreak there was also under control after a week of steady declines in the number of cases.

In response, China’s benchmark stock index rose 1.0%, while European indexes edged lower.

2. EU struggles to salvage Russia’s oil embargo

The EU-proposed embargo on Russian oil imports remains l.

Weekend talks ahead of a two-day summit that began later on Monday failed to overcome Hungary’s opposition to a ban on imports of crude and refined products that will take effect by the end of the year, although it included a temporary waiver for delivered oil through Drouge The southern arm of the Ba River, which feeds Hungary, Slovakia and the Czech Republic.

EU leaders will also reportedly sign a $10 billion financial aid package to Ukraine to keep its government running and discuss measures to help Ukraine’s grain exports to world markets.

Meanwhile, on the battlefield, Russia continues to steadily advance its efforts to occupy the remaining no-man’s land in eastern Ukraine. Ukrainian authorities confirmed street fighting broke out in Severdonetsk, the largest city in the Luhansk region still under government control.

3. Eurozone inflation unexpectedly rises

Inflation in the US may have peaked, but inflation in the euro zone appears to be still accelerating.

Preliminary data from Germany, the euro zone’s largest economy, showed prices rose 0.9% to 1.1%, above the national average of 0.8% in April and beating expectations for a slowdown to 0.5%. The entire preliminary data will be released at 8AM ET (1200GMT).

In and , price increases accelerated to 0.8%, pushing the annual rate to 9.0%, respectively.

In comments ahead of the data, the ECB’s chief economist told the Cinco Dias newspaper that two quarter-point hikes in the ECB’s key interest rate this summer were better than a half-point increase in July.

4. Weakness in the UK property market

The UK economic slowdown is finally spilling over into the housing market.

Data from online real estate broker Zoopla showed the share of home offers that were discounted rose to 5 per cent of the total last month. It noted that the average price cut was around 10%. Homes also take longer to sell.

Annual house price inflation slowed to 8.4% in April from 9.0% in March, Zoopla estimated. It expects to fall further to around 3% by the end of the year.

Against the backdrop of a chronic mismatch between supply and demand, that still means house prices hit record highs between now and then.

5. Oil prices edge higher as Chinese demand is expected to rebound

Crude oil prices were pushed higher on news from China, paving the way for a recovery in demand from the world’s largest importer.

Futures were up 0.4% at $115.47 a barrel as of 6:30 a.m. ET, while futures were up 0.5% at $116.18 a barrel.

Speculative long interest in oil hit its highest level in two months last week, U.S. data showed on Friday, as the prospect of a recovery in Chinese demand, coupled with persistent supply shortages, further tightened the market.