AFP – Asian markets surged on Tuesday as China indicated it will lift its embargo, bolstering prospects for the world’s second-largest economy and helping oil’s upward run amid worries of Russian supply cuts.
China has quickly lifted its harsh pandemic restrictions, despite an increase in illnesses.
The restrictions had harmed the economy and spurred countrywide demonstrations.
Three years of border limitations will be lifted on January 8, when Beijing downgrades Covid-19 to a Class B infectious disease.
People in China have subsequently rushed to book international flights, with the reopening expected to be a windfall to the tourism sector.
China’s benchmark Shanghai index and the second index in Shenzhen both gained ground, while Tokyo finished slightly higher, with Seoul, Singapore, and Mumbai also rising.
Hong Kong and Sydney markets were remained closed for the vacation.
“Global markets rose Tuesday as the dollar fell amid good mood from China raising speed limits on zero-Covid off ramps and the weakening of a key inflation gauge in the US,” SPI Asset Management’s Stephen Innes said.
“Inbound tourism is not a great economic boon for China in comparison to domestic tourism, but policy acceleration and early zero-Covid departure implies growth might recover tremendously,” he added.
Markets were also lifted by new data last week that suggested a slowdown of US inflation as well as an increase in consumer spending, causing Wall Street to extend its gains into the Christmas holiday.
However, the news was not conclusive, and all eyes will be on how the Federal Reserve raises interest rates to balance inflationary worries with the danger of a recession induced by higher borrowing costs.
Following a commodities traders’ vacation on Monday, oil prices rose further as a senior official warned Russia might reduce up to 7% of its output next year.
According to Bloomberg News, cold temperatures in the United States disrupted production by affecting more than 1.8 million barrels per day of oil processing capacity in Texas.
Brent Crude and West Texas Intermediate were both higher on supply shortages and prospects of resurgent Chinese demand.
On Tuesday, benchmark European markets began with significant gains, with Paris and Frankfurt both about 1% higher in early trade. London stayed closed.