Asian markets up after China ends travel quarantine

Wednesday, 28 December 2022 00:00 - - {{hitsCtrl.values.hits}}

HONG KONG (AFP): Asian markets rose on Tuesday after China said it would end quarantine for arrivals, spurring hopes for the revival of the world’s second-largest economy and boosting oil’s upward surge on fears of Russian production cuts.

China has abruptly reversed its strict pandemic restrictions even as a surge in infections overtakes the country.

The curbs had torpedoed the economy and sparked nationwide protests.

The latest easing will see three years of border controls end on January 8, when Beijing downgrades COVID-19 to a Class B infectious disease. People in China have since gone rushing to search for overseas flights, with the reopening set to be a boon for the travel industry.

China’s benchmark Shanghai index and the second index in Shenzhen both posted healthy gains, while Tokyo ended a shade higher with Seoul, Singapore and Mumbai also all up.

Markets in Hong Kong and Sydney were still closed for a holiday.

“Global equities climbed Tuesday while the dollar declined amid positive sentiment from China upping the speed limits on zero-COVID off ramps and the softening of a key inflation measure in the US,” Stephen Innes of SPI Asset Management said.

“Inbound tourism is not a huge economic bounty for China relative to domestic tourism but policy fast-track and early zero-COVID exit means growth could recover enormously,” he said.

Markets have also been buoyed by fresh data last week that indicated a slowing of US inflation, as well as an uptick in consumer spending, which saw Wall Street take gains into the Christmas break. But the news was not definitive and all eyes will be on how the Federal Reserve raises interest rates to balance inflationary concerns alongside the possibility of a recession caused by increased borrowing costs.

Following a holiday for commodities traders on Monday, oil continued its surge after a senior official said Russia could cut up to seven percent of its production next year. Production was also curtailed by freezing conditions in the United States, where more than 1.8 million barrels a day of oil processing capacity in Texas was hit by the extreme weather, according to Bloomberg News.

Both Brent Crude and West Texas Intermediate were up on the supply shortfalls and expectations of renewed demand from China.

Benchmark European markets opened with healthy gains on Tuesday, with both Paris and Frankfurt nearly one percent higher in early trade. London remained closed.