Merck Foundation and African First Ladies marking World Cancer Day 2023 through 110 scholarships of Oncology Fellowships in 25 countriesRead more Supporting women leaders and aspirants to unleash their potentialRead more Fake medicines kill almost 500,000 sub-Saharan Africans a year: United Nations Office on Drugs and Crime (UNODC) reportRead more Climate crisis and migration: Greta Thunberg supports International Organization for Migration (IOM) over ‘life and death’ issueRead more United Nations (UN) Convenes Lake Chad Countries, Amid Growing Regional CrisisRead more 11 Disruptive Startups Selected for Cohort 3 of the Africa Startup Initiative Program (ASIP) Accelerator Program powered by Startupbootcamp AfricaRead more Africa Data Centres breaks ground on new Sameer facility in NairobiRead more Coffee with a human face: A union that improves livelihoods for Ugandan farmersRead more Trends Predicted to drive the retail industry in 2023Read more Vantage Capital exits Pétro IvoireRead more

Stocks, crude rise as China fears give way to Covid easing hopes

show caption
After a day of rare protests in China, police were out in force./AFP
Print Friendly and PDF

Nov 29, 2022 - 10:13 AM

HONG KONG, CHINA — Equities rose with oil prices and the dollar weakened Tuesday as China avoided another night of protests after a weekend of unrest, with speculation growing that officials will announce a further easing of the country’s strict Covid containment measures.

The gains were led by a rally in Hong Kong and Shanghai, with property firms enjoying a much-needed surge on the back of moves to ease funding restrictions on troubled developers.

But sentiment was tempered by warnings from top Federal Reserve policymakers that US interest rates would rise further and could go higher than initially thought to fight inflation.

The remarks were partly to blame for big losses of more than one percent in Wall Street’s three main indexes.

China was rocked by demonstrations at the weekend calling for more political freedoms and an end to the country’s long-running and economically painful zero-Covid strategy that has seen millions thrown into lockdown for months.

Several arrests were made and security forces were out in force Monday to prevent a repeat of the protests, which were the most widespread since pro-democracy demonstrations were crushed in 1989.

The return of some calm helped Hong Kong stocks rally more than five percent and Shanghai more than two percent, with rumbling that the unrest could help push leaders to ease some of the strict containment measures.

Beijing announced Tuesday afternoon a plan to speed up vaccinations of people aged 60 and older after seeing record daily case numbers in recent days.

Talk of a lighter approach to fighting the disease has helped reopening-linked firms rise, with retailers, cinema chains, Macau casinos and other tourism stocks benefiting.

Property firms were among the best performers after China said it would end a ban on firms raising cash by selling stocks, the latest measure to ease pressure on the sector, which has seen several companies collapse and threatens the wider economy.

Chinese investors were taking “a more pragmatic approach to the current Covid proceedings”, said SPI Asset Management’s Stephen Innes. “Indeed, a probable outcome is a quicker loosening of restrictions once the current Covid wave and numerous protest flash points subside.”

Sydney, Seoul, Singapore, Wellington, Bangkok, Mumbai, Taipei and Manila were also in positive territory, though Tokyo dipped with Jakarta.

London, Paris and Frankfurt all opened on the front foot.

The more upbeat mood saw the dollar drop against its peers, while oil prices rallied on the prospect of a pick-up in demand in China if leaders roll back some of their measures.

Attention is turning to the United States this week with a number of Fed officials due to speak, including boss Jerome Powell, while Friday sees the release of key jobs data, which could provide an idea about the bank’s plans for monetary policy.

Bets on a slowdown in its pace of rate hikes have boosted markets for the past weeks, but some high-ranking members on Monday looked to play down the chances of a more dovish pivot.

St. Louis Fed chief James Bullard warned “markets are underpricing a little bit the risk that the (policy board) will have to be more aggressive rather than less aggressive in order to contain the very substantial inflation that we have in the US”.

And Richmond Fed president Thomas Barkin added: “I’m very supportive of a path that is slower, probably longer and potentially higher than where we were before.”

The officials indicated borrowing costs would not likely come down until the end of next year or in 2024.

Key figures around 0820 GMT 

Tokyo – Nikkei 225: DOWN 0.6 percent at 28,027.84 (close)

Hong Kong – Hang Seng Index: UP 5.2 percent at 18,204.68 (close)

Shanghai – Composite: UP 2.3 percent at 3,149.75 (close)

London – FTSE 100: UP 0.5 percent at 7,511.04

Euro/dollar: UP at $1.0356 from $1.0347 on Monday

Dollar/yen: DOWN at 138.20 yen from 138.87 yen

Pound/dollar: UP at $1.2024 from $1.1952

Euro/pound: DOWN at 86.13 pence from 86.50 pence

West Texas Intermediate: UP 1.6 at $78.46 per barrel

Brent North Sea crude: UP 1.8 percent at $84.68 per barrel

New York – Dow: DOWN 1.5 percent at 33,849.46 (close)

  • bio
  • twitter
  • facebook
  • latest posts

MAORANDCITIES.COM uses both Facebook and Disqus comment systems to make it easier for you to contribute. We encourage all readers to share their views on our articles and blog posts. All comments should be relevant to the topic. By posting, you agree to our Privacy Policy. We are committed to maintaining a lively but civil forum for discussion, so we ask you to avoid personal attacks, name-calling, foul language or other inappropriate behavior. Please keep your comments relevant and respectful. By leaving the ‘Post to Facebook’ box selected – when using Facebook comment system – your comment will be published to your Facebook profile in addition to the space below. If you encounter a comment that is abusive, click the “X” in the upper right corner of the Facebook comment box to report spam or abuse. You can also email us.