Asian markets bounce back as China eases lockdown measures; oil prices continue to rise

People hold an umbrella during the morning rush hour in Beijing on June 28, 2022. (Photo by Noel Celis/AFP)

HONG KONG, China (AFP) – Most Asian markets rebounded early losses on Tuesday, as oil continued its recent rally after China cut visitor quarantine times, raising hopes of stimulating a struggling economy.

The news comes as Beijing and Shanghai appear to have contained the coronavirus outbreak, which forced officials to impose lockdowns that exacerbated problems in the global supply chain.

Authorities have said arriving travelers will now only have to quarantine for 10 days instead of the three weeks that were in place during the pandemic.

This image, taken on June 18, 2022, shows arriving passengers waiting to be sent to quarantined destinations from Beijing International Airport in Beijing. (Photo by Leo RAMIREZ/AFP)

The news provided much-needed gains in equities, which were mostly eased by renewed fears of central bank rate hikes and soaring inflation.

On Monday, the Central People’s Bank of China pledged to support the world’s number two economy.

Earnings extended a rally seen last week on bets that a possible recession next year could allow CFOs to ease their monetary tightening campaign.

“This easing sends a message that the economy comes first,” said Li Changmin of Snowball Wealth. “It’s a sign of the importance of the economy at this juncture.”

After spending the morning in the red, Hong Kong, Shanghai, Tokyo, Seoul and Wellington were up, while Sydney, Manila and Bangkok were also up. Mumbai, Taipei and Jakarta have slipped, while Singapore has stagnated.

London, Paris and Frankfurt rose at the opening.

However, Huang Yanzhong of the New York Council on Foreign Relations warned: “It is not surprising that China has managed to return to the so-called zero after all its enormous efforts.

“But this does not mean that he can claim a complete and lasting victory because he did not destroy the virus,” he said. “If they don’t completely cordon off Beijing and Shanghai, the virus could get in at any time.”

However, while inflation and rates remain a concern, exacerbated by the war in Ukraine, some commentators remain relatively optimistic as the second half of the year approaches.

Market strategist Louis Navelier said in a note: “While it is sobering that the first half of the year is the worst since 1970, history also says that when the first half of the year falls by at least 15 percent, the second half of the year will average returns every time. 24 percent.”

And Ben Leidler, Global Markets Strategist at eToro, added that much of the expected economic weakness was largely priced in by dealers.

“Much has already been discounted by markets that may be in ‘bad news is good news’ mode as the slowdown eases inflation and interest rate concerns,” he said.

A “less bad” gradual decline in inflation risks is possible, as well as a slowdown rather than a recession leading to a “U-shaped” rebound. Investors are focusing on cheap and defensive assets while managing rising risks.”

Oil prices rose more than one percent, consolidating a rally that saw Brent and WTI up more than eight percent since Wednesday. Both major contracts fell heavily at the start of the month due to recession worries.

German Economics and Climate Protection Minister Robert Habeck shows a graph with forecasts of gas storage levels when he gives a press conference on energy security on June 23, 2022 at his ministry in Berlin. – He said Germany would raise the alert level under its emergency gas plan to secure supplies after a recent reduction in pipeline supplies from Russia. (Photo by Tobias SCHWARTZ/AFP)
(FILES) In this file photo taken March 12, 2019, a jack is at work at an oil production site in Cotulla, Texas. – On April 20, 2020, U.S. oil fell below $15 a barrel, its lowest level in more than two decades, as fears of a virus-driven demand shock and storage shortage overshadowed a production cut deal. (Photo by Lauren ELLIOTT/AFP)

The rise came on the back of rising demand from China, while supply concerns were fueled by political crises in the producing countries of Libya and Ecuador.

“The rhetoric surrounding the announcement of a Shanghai victory over Omicron seems to encourage Asian traders to keep buying,” said Geoffrey Halley of OANDA.

Meanwhile, ratings agency Moody’s confirmed that Russia defaulted on foreign debt for the first time in a century after bondholders failed to receive $100 million in interest payments.

The late payments followed a series of Western sanctions that further isolated Moscow after its invasion of Ukraine.

Russia lost the last opportunity to service its foreign currency loans after the United States lifted an exemption last month that allowed US investors to receive payments from Moscow.

– Key figures around 07:20 GMT –
Tokyo – Nikkei 225: up 0.7% to 27,049.47 (close)

Hong Kong – Hang Seng Index: up 0.6% to 22,374.65

Shanghai – Composite: up 0.9% to 3409.21 (close)

London – FTSE 100: up 0.9% to 7,322.05.

West Texas Intermediate: up 1.6% to $111.32 per barrel

Brent North Sea oil: up 1.6% to $117.00 per barrel

Dollar / yen: up to 135.54 yen from 135.48 yen on Monday.

EUR/USD: up $1.0595 from $1.0583

Pound/dollar: UP $1.2287 from $1.2268

Euro/lb: DOWN by 86.22p from 86.24p.

New York-Dow: DOWN 0.2% to 31,438.26 (close)

© Agence France-Presse