Asian stocks up as China shuns Zero-Covid policy

Stocks in Asia and Europe made substantial gains as China officially announced overnight it will end quarantine for inbound travelers on Jan 8 and positive sentiments gripped the European markets.

Symbolizing an end to its zero-Covid policy that it’s held for nearly three years, China also downgraded Covid to a less strict Category B, health authorities said, from its current top-level Category A. Health officials are slated to hold a press briefing on Covid at 3 p.m. Beijing time.

The Shanghai Composite rose 0.98 percent to close at 3,095.57 and the Shenzhen Component gained 1.16 percent to 11,106.50 while markets in Hong Kong, Australia and New Zealand were closed for Christmas holiday.

In Japan, the Nikkei 225 rose 0.16 percent to 26,447.87 and the Topix gained 0.4 percent to 1,910.15 as the nation saw retail sales up for the ninth consecutive month led by tourism. The Kospi in South Korea gained 0.68 percent to 2,332.79 and the Kosdaq climbed 1.37 percent 704.19.

European markets

European stocks moved higher on Tuesday as positive sentiment continues in the final trading days of 2022.

France’s CAC 40 was up around 0.9 percent followed a 0.8 percent increase in Germany’s DAX and 0.7 percent and Italy’s FTSE MIB. The UK’s FTSE index is closed Tuesday for a public holiday.

Meanwhile, AEX in Amsterdam was up 0.66 percent and SMI in Switzerland gained 52.2 points or 0.48 percent.

Sector-wise, autos and chemicals both added 1.6 percent to lead gains as most sectors traded in positive territory, as stocks in Europe received a boost from their counterparts in Asia-Pacific early in the day.

China’s industrial profits fall

Profits of China’s major industrial firms contracted further by 3.6 percent on year-on-year basis in the first 11 months of the year, data from the National Bureau of Statistics (NBS) showed Tuesday.

The reason behind this trend during the January-November period was strict Covid-related curbs which disrupted factory activity and supply chains, but analysts foresaw brighter long-term economic prospects after a U-turn in Covid policy.

Despite Beijing ditching some of the world’s toughest anti-virus restrictions in early December, and on Monday announcing it would end quarantine requirements for inbound travellers from Jan 8, the economy is still expected to struggle over the winter months as much of the population becomes infected and unable to work while recovering.

According to the NBS, Industrial profits had slumped to $1.11 trillion, which compares with a 3.0 percent drop for January-October. No standalone data was released for November.

Wall Street

US stock futures rose on Tuesday morning as investors head into the final trading days of 2022, deliberating whether a Santa Claus rally will appear and lift a market that has been weighed down by recession fears.

Dow Jones Industrial Average futures rose by 154 points, or 0.46 percent. S&P 500 and Nasdaq 100 futures advanced 0.63 percent and 0.75 percent respectively.

During the regular session Friday, the Dow Jones Industrial Average closed 176 points higher, or 0.5 percent. The S&P 500 rose 0.6 percent and the Nasdaq Composite added 0.2 percent.

Friday marked the start of the time period for a Santa Claus rally, which is typically considered the final five-day trading stretch in the current year, as well as the first two trading days in the New Year. Markets were closed Monday for the Christmas holiday.

Due to low trading volumes, investors are expecting either relative quiet or further volatility during the holiday-shortened week. Markets are closing out a month and year defined by a surge in recession fears.

In December, the S&P 500 dropped roughly 5.8 percent, while the Dow and Nasdaq dropped about 4 percent and 8.5 percent respectively. These are the biggest monthly declines since September. The major averages are headed for their worst annual performance since 2008.


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