Chinese and Hong Kong stocks bucked the trend across the region bouncing back on Tuesday as hopes of easing Covid restrictions and policy stimulus boosted hopes of an economic turnaround.
Speculation that coronavirus control measures could be eased by Beijing in some pilot areas led to buying in the tourism and consumer goods sectors, while sentiment was also lifted by expectations of policy support for the economy.
China said it will step up the implementation of macro policies as the downward pressure on the economy is increasing, state media quoted Premier Li Keqiang as saying on Monday.
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Reports of pilot regions including Shanghai being picked for looser quarantine requirements encouraged traders and the blue-chip CSI300 index rose 2.0%, to 4,179.97.
The Shanghai Composite Index closed up by 1.46%, or 46.20 points, to 3,213.33, while the Shenzhen Composite Index on China’s second exchange was up 1.81%, or 36.44 points, to 2,047.88.
Tourism stocks surged 8.4%, transport firms soared 5.1%, while consumer staples added 3.9%.
Online gaming stocks gained as authorities granted licences to 45 internet games in April, the first time since July. The anime comic game subindex closed up 2.4%.
Hong Kong stocks closed with modest gains with all eyes on key US inflation data due later in the trading day. The Hang Seng Index was up 0.52%, or 110.83 points, to 21,319.13.
“Strong credit supply is helpful but the economy will likely stay weak with many cities under lockdown,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, adding that the Covid outbreaks and the zero-tolerance policy were the most important uncertainties faced by the economy.
Tokyo Jittery Over China
But the mood was less upbeat elsewhere as Tokyo stocks ended lower with investors disheartened by aggressive tightening by the Federal Reserve and jittery over economic uncertainty in China.
The benchmark Nikkei 225 index lost 1.81%, or 486.54 points, to 26,334.98, while the broader Topix index slid 1.38%, or 26.01 points, to 1,863.63.
Indian stocks lost ground with Mumbai’s signature Nifty 50 index down 0.57%, or 101.25 points, at 17,573.70.
Seoul, Taipei, Sydney and Singapore were all in the red too, though Jakarta eked out small gains.
Meanwhile, world stocks slipped to their lowest levels in almost a month, the dollar held firm and selling again gripped the world’s biggest bond markets ahead of data expected to show annual US inflation rising at its fastest pace in 40 years.
Dollar Index Back Above 100
With US 10-year Treasury yields rising to new highs above 2.8%, levels last seen in late 2018, unease that an aggressive policy response to inflation from the US Federal Reserve could undermine economic growth weighed on sentiment.
“Markets have decided that central banks are late and need to do more to tame inflation, and moderate volatility in equities is not enough to stop this,” Nordea chief analyst Jan von Gerich said.
“The reason for the wobble in equity markets is higher rates and geopolitics.”
The dollar index, a measure of the greenback’s value against six peers, was back above 100 to touch its highest level in almost two years.
Brent crude rose 2.5% to $100.96 per barrel, while US crude was almost 2.6% higher at $96.77.
Spot gold was little changed at around $1,953 per ounce.
Key figures around 0810 GMT
Tokyo – Nikkei 225 > DOWN 1.81% at 26,334.98 (close)
Hong Kong – Hang Seng Index > UP 0.52% at 21,319.13 (close)
Shanghai – Composite > UP 1.46% at 3,213.33 (close)
London – FTSE 100 > DOWN 0.81% at 7,556.88
Brent North Sea crude > UP 2.42% at $100.86 per barrel
West Texas Intermediate > UP 2.53% at $96.68 per barrel
New York – Dow > DOWN 1.19% at 34,308.08 (Monday close)
- Reuters with additional editing by Sean O’Meara
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