Shares fluctuate higher as China eases quarantine rules

A man wearing a protective mask, in the middle of an outbreak of coronavirus (COVID-19), walks past an electronic board showing graphs (top) of the Nikkei index outside a brokerage house in Tokyo, Japan, March 10, 2022. REUTERS / Kim Kyung-Hoon

HONG KONG, June 28 (Reuters) – Asian stocks plunged into positive territory in afternoon trading on Tuesday, driven by China’s decision to ease some quarantine requirements for international arrivals, with particular support for Hong Kong stocks.

MSCI’s broadest index for Asia-Pacific equities outside Japan (.MIAPJ0000PUS) was up 0.5%, after spending most of the day in the red. The index has fallen 3.8% so far this month.

The health authorities said on Tuesday that China will halve to seven days its COVID-19 quarantine period for visitors from abroad, with another three days at home. read more

Following the news, Hong Kong’s Hang Seng Index (.HSI) reversed its losses and jumped 0.85% in afternoon trading.

In China, the blue-chip CSI300 index (.CSI300) was 1% higher, even after reversing previous losses.

The sharp change in mood seemed to last into the global day with the pan region Euro Stoxx 50 futures up 0.31%, German DAX futures 0.2% higher and FTSE futures climbing 0.47%. Futures on US equities rose 0.46 percent.

“With local new infections falling further in June, and COVID mitigation to ease more, we expect the (Chinese) economy to continue to recover,” BofA said in a note. “That said, given soft domestic demand and lingering covid uncertainty, it is likely to be bumpy in the coming months.”

Market sentiment was also strengthened by an official’s remarks that Beijing would roll out tools to meet economic challenges as COVID-19 outbreaks and risks from the Ukraine war pose a threat to employment and price stability. read more

Australian equities (.AXJO) rose 0.86%, while Japan’s Nikkei stock index (.N225) rose 0.66%.

US equities ended a volatile trading session slightly lower on Monday with few catalysts to influence investor sentiment as they approach halfway through a year in which stock markets have been hit by rising inflation concerns and tightening of Fed policies.

Interest rate sensitive megacaps like Amazon.com Inc (AMZN.O), Microsoft Corp (MSFT.O) and Alphabet Inc (GOOGL.O) were the heaviest dragons on the US major indices.

The Dow Jones Industrial Average (.DJI) fell 0.2%, the S&P 500 (.SPX) lost 0.30% and the Nasdaq Composite (.IXIC) fell 0.72%.

Oil prices continued to rise with investors still weighing concerns about an economic downturn against concerns over lost Russian supplies amid sanctions linked to the conflict in Ukraine.

U.S. crude rose 1.02% to $ 110.69 a barrel. Brent oil rose to $ 116.42 a barrel.

“A seam of dense supply news strengthened the (oil) market,” said analysts at the Commonwealth Bank of Australia. “Political unrest could limit supply from a couple of second-tier producers, Ecuador and Libya. And then there are the G7’s proposed price caps on Russian oil.”

In the bond markets, government interest rates rose on Monday after data on orders for capital and durable goods, and as pending house sales surprised to the upside from last month.

The yield on the benchmark index for 10-year government bonds last reached 3.1828% on Tuesday, compared with the US close of 3.194% on Monday. The two-year interest rate, which rises with traders’ expectations of higher Fed fund interest rates, reached 3.0934%.

In addition, the dollar declined relative to major rivals as investors weighed on expectations of inflation and interest rate hikes. The dollar index, which follows the dollar against a basket of currencies from other major trading partners, was down to 103.96.

Gold was slightly higher with the spot price trading at $ 1,825.79 per ounce.

Reporting by Julie Zhu; Edited by Sam Holmes

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