Share prices in Asia rallied on Monday as hopes for less aggressive US rate hikes and the opening of China’s borders bolstered the outlook for the global economy.
The welcoming sings for the global markets came after Hong Kong and mainland China resumed quarantine-free travel over the weekend, signaling the end of zero-Covid policy which kept borders effectively closed for nearly three years.
Hong Kong’s Hang Seng index gained 1.71 percent on the first day of trade following the reopening. Technology stocks led gains alongside travel and consumer names. In mainland, the Shanghai Composite rose 0.59 percent and the Shenzhen Component rose 0.79 percent.
However, it is South Korea’s Kospi which leading the gains in the region with a 2.59 percent increase1.82%, leading gains in the region. The Kosdaq gained 1.4% in its first hour of trade. It was followed by Taiwan’s TWI with a 2.21 percent gain.
The S&P/ASX 200 gained 0.62 percent as investors digested the Australia’s buildings approvals print that came in significantly lower than expected. Japan’s markets were closed to observe Coming of Age Day, a public holiday.
In the US, the stocks had closed the last week on a high note with the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite staging a rally Friday after the December jobs report and an economic activity survey showed signs that inflation may be cooling.
As a result, the Nasdaq Composite surged 2.6 percent or 264.05 points to close at 10,569.29. The S&P 500 ended up 86.98 points or 2.28 percent to 3,895.08 followed by the Dow Jones Industrial Average increasing 700.53 points or 2.13 percent to close at 33,630.61.
It was the best day for the Dow and S&P 500 since Nov 30 and the best for the Nasdaq since Dec 29. Every Dow component ended Friday up.
Friday’s rally helped stocks end in positive territory for the week, which was the first of the year. The Dow and S&P 500 each closed the week up 1.5 percent. The Nasdaq advanced 1 percent.
December job report
Hiring slowed modestly in December as employers added 223,000 jobs to close out an otherwise booming year, possibly foreshadowing the deeper pullback and recession that many economists expect in 2023.
The unemployment rate fell from 3.7 percent to 3.5 percent, matching a 50-year low, the US Labor Department said Friday.
For all of 2022, the US added 4.5 million jobs, second most behind the 6.7 million gained the previous year, as the nation continued to heal from record job losses in the early days of the COVID-19 pandemic.
Job gains for October and November were revised down by a total of 28,000. October’s was revised from 284,000 to 263,000 and November’s, from 263,000 to 256,000, painting a slightly weaker portrait of job growth in the fall.
The report featured some good news for a Federal Reserve determined to lower inflation. Last month, average hourly wages rose 9 cents to $32.82, pushing down the annual increase to a still elevated 4.6 percent from 4.8 percent the previous month. The Fed is looking for a pullback in pay increases to beat back inflation that hit a 40-year high last year and pause its aggressive campaign of interest rate hikes that could tip the economy into recession.