SYDNEY – Stocks in Asia and US futures advanced on Monday (May 30) after China eased some virus curbs and Wall Street had its best week since November 2020.
Japanese and Hong Kong equities led gains, while S&P 500 and Nasdaq 100 contracts climbed in a sign that the bounce may have further to run. The S&P 500 wiped out its May losses and snapped a string of seven weekly declines as institutional investors rebalanced their portfolios into the end of the month.
Japan’s Nikkei index climbed 2.25 per cent, while Australia’s S&P/ASX 200 Index advanced 1.2 per cent.
Singapore’s Straits Times Index was up 0.2 per cent at 1.17pm local time.
Hong Kong’s Hang Seng Index gained 2.1 per cent and the Shanghai Composite Index rose 0.5 per cent.
China’s renminbi outperformed, with the offshore currency rising 0.9 per cent to 6.6581 per US dollar, after the nation reported fewer Covid-19 cases in Beijing and Shanghai. That spurred the government to ease some of the strict virus controls to stimulate sagging growth. Chinese stocks had more modest gains as reopening plans sparked gains in selective sectors like consumer and travel.
The US dollar slipped for a third day versus major peers as havens lost their appeal amid the improved mood, with the Bloomberg Dollar Spot Index down 0.2 per cent.
Oil traded near US$116 a barrel as the European Union failed to agree on a revised package of Russian sanctions. Cash Treasuries will not trade in Asia because of the United States’ Memorial Day holiday.
Traders are pondering whether the bottom of the sell-off is near as investors have been buying the dip after one of the worst starts to the year for equities. However, a wall of worries remains from hawkish central banks underscoring fears of a recession, escalating food inflation from the war in Ukraine and China’s lockdowns stunting economic activity.
“We are in the middle of a bear market rally,” said Ms Mahjabeen Zaman, Citigroup Australia head of investment specialists, said on Bloomberg Television. “I think the market is going to be trading range-bound trying to figure out how soon is that recession coming or how quickly is inflation going down.”
She added that Treasury yields are set to peak this year.
Traders will be looking to the US payroll numbers later this week to gauge the Federal Reserve’s tightening path as it strives to rein in inflation. Meanwhile, the Fed is set to start shrinking its US$8.9 trillion (S$12.2 trillion) balance sheet starting on Wednesday.
Elsewhere, Asia’s coal benchmark rallied to the highest level on record as India moved to secure shipments, tightening supplies in the region.