November 27, 2022

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Asian stocks gain despite rising COVID cases in China By Reuters

3 min read

©Reuters. FILE PHOTO: An investor watches a stock information board at a brokerage office in Beijing, China October 8, 2018. REUTERS/Jason Lee

By Scott Murdoch

SYDNEY (Reuters) – Asian stock markets were mostly higher on Wednesday, but oil and the dollar slipped as rising COVID-19 cases in China raised fears of fresh lockdowns that could slow the reopening of the world’s second-biggest economy.

European equities appeared higher to follow Asia, with the overall region up 0.33%, futures up 0.27% and futures up 0.16%. US stock futures, the , slipped 0.07%.

MSCI’s broadest index of Asia-Pacific stocks outside of Japan rose 0.4%, buoyed by overnight gains in US stocks. The index is up 12% so far this month.

Australian stocks rose 0.63%, led by mining and resource giants. The Japanese stock exchange was closed for a national holiday.

New Zealand’s central bank hiked interest rates by 75 basis points on Wednesday – the biggest move ever – to a near 14-year high of 4.25% and announced further rate hikes as it struggles to contain stubbornly high inflation.

Hong Kong’s was up 0.46% in early trade, while China’s CSI300 index was down 0.2%.

China on Wednesday reported 29,157 new COVID infections for Nov. 22, compared with 28,127 new cases the day before. Case numbers in Beijing and Shanghai are steadily rising and remain high in several major manufacturing and export hubs, prompting authorities to close some facilities.

“The biggest story for investors in Asia remains the reopening of China,” said Suresh Tantia, senior investment strategist at Credit Suisse in Singapore.

“We had seen Chinese markets up as much as 20% but those expectations are being scaled back. We believe reopening will be a slower process and will not be in a rush to account for any losses or posting any profits they may have made in China.”

Meanwhile, the release of the US Federal Reserve’s minutes from its November monetary policy meeting later on Wednesday will be eagerly awaited by investors as they watch for signs of discussions about slowing the pace of interest rate hikes.

The November consumer price index will be released on December 13, a day before the central bank announces its final interest rate decision for 2022.

“The Fed will be very data-driven and they will need to see more than a weaker inflation result because a weaker month in October is not a trend,” said Clara Cheong, investment strategist at JPMorgan (NYSE:) Asset Management.

“If inflation cools in November, we still believe the Fed will hike 50 basis points rather than show less or signs of a turnaround.”

In Asian trading, the benchmark return rose to 3.7578% compared to Tuesday’s US close of 3.758%.

The two-year yield, which rises on traders’ expectations for higher Fed fund rates, hit 4.5144% compared to a US close of 4.517%.

The dollar rose 0.13% against the yen to 141.43.

The European single currency was up 0.1% on the day to $1.0313, while the US dollar, which tracks the greenback against a basket of currencies from other major trading partners, was slightly weaker at 107.07.

“The US dollar has pared some of its recent gains as central banker consensus on how much interest rates should rise falters,” Commonwealth Bank analyst Tobin Gorey wrote on Wednesday.

“Smaller or fewer rate hikes may not be cause for optimism, they’re cause for less pessimism.”

Oil failed to hold on to earlier gains during the Asian session.

It initially rose after top exporter Saudi Arabia said OPEC+ would maintain production cuts and take more steps to balance the market.

But prices started falling later in the session. By midday, it was down 0.19% to $80.80 a barrel and down 0.3% to $88.08.

Gold was slightly lower. was trading at $1734.35 an ounce. [GOL/]

As the FTX exchange collapse continues to rock cryptocurrency markets, it surged 2.2% to $16,482 in Asian trading hours.

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