China has persisted in its strict zero-Covid policy to stamp out an Omicron-fuelled wave, ordering lockdowns in various cities and shuttering factories and ports


China has persisted in its strict zero-Covid policy to stamp out an Omicron-fuelled wave, ordering lockdowns in various cities and shuttering factories and ports – Copyright AFP Paul Faith

Global stock markets rallied Tuesday on hopes that China will ease its weeks-long Covid lockdown and gradually reopen businesses.

European exchanges closed higher and Wall Street’s main indices also rose in mid-day trading, spurred by a nearly one-percent rise in April retail sales.

“We’ve seen a much more positive vibe around European equity markets today, with reports out of Asia suggesting that China might be close to looking to ease some of its Covid restrictions, as case rates come down,” Michael Hewson, chief market analyst at CMC Markets UK, said.

“This hope appears to be helping to power some buying interest, and is also pushing up metals, as well as oil prices, with Brent crude at six-week highs,” he added.

Much of Shanghai, China’s economic hub and a city of 25 million, has been under lockdown since April as Beijing attempts to stamp out an Omicron-fuelled virus surge under its strict zero-Covid policy.

The impact of Beijing’s zero-Covid strategy on the world’s second-largest economy was revealed Monday when official data showed that retail sales and industrial production in April on-year had slumped to their lowest levels in more than two years.

World markets have also been roiled by surging inflation, spiralling oil and wheat prices and Russia’s war in Ukraine — leaving investors jittery.

Wheat prices hit a record high in the European market Tuesday at 434.25 euros after the world’s second producer India announced an export ban due to falling output caused by climate change. 

Oil was another area of concern. 

“Oil prices have hit their highest levels since early March as Europe continues to work towards a Russian embargo and China looks to ease Covid restrictions,” said Craig Erlam, another market analyst at OANDA. 

“The question becomes just how much further they’ll go and how uncomfortable it’s going to get,” he said.

Analyst Fawad Razaqzada at City Index was bullish on the demand for oil despite rising prices.

“Demand did fall briefly when China went into a lockdown but now with Shanghai emerging from lockdowns and other cities are likely to follow suit, demand should remain elevated,” he said.

“Unless the OPEC and its allies ramp up production and fast, it is difficult to see how prices can go down meaningfully,” he added.

The British pound was the best performing G10 currency on Tuesday as traders bet that soaring UK inflation, lifted in part by wage rises, will see more monetary policy tightening by the Bank of England.

There are rising concerns that ongoing rapid interest rate rises by the BoE and other central banks including the Federal Reserve to curb decades-high inflation will push the economy into a downturn.

On the corporate front Tuesday, India’s insurance giant LIC slumped on its market debut following the country’s biggest-ever initial public offering, closing nearly eight percent below the IPO price.

Prime Minister Narendra Modi’s government raised $2.7 billion by selling 3.5 percent of Life Insurance Corporation of India. But it was forced to cut back the offer from a planned five percent after markets turned volatile.

Elsewhere, Elon Musk said his planned purchase of Twitter would not go ahead unless he was assured that fewer than five percent of accounts on the platform were fake.

The Tesla owner has bid $44 billion for the social media platform.

– Key figures at around 1530 GMT –

New York – Dow: UP 0.8 percent at 32,482.75 points 

EURO STOXX 50: UP 1.3 percent at 3,734.36 

London – FTSE 100: UP 0.7 percent at 7,518.35 (close)

Frankfurt – DAX: UP 1.6 percent at 14,185.94 (close)

Paris – CAC 40: UP 1.3 percent at 6,430.19 (close)

Hong Kong – Hang Seng Index: UP 3.3 percent at 20,602.52 (close) 

Shanghai – Composite: UP 0.7 percent at 3,093.70 (close)

Tokyo – Nikkei 225: UP 0.4 percent at 26,659.75 (close)

Brent North Sea crude: UP 0.6 percent at $114.91 per barrel

West Texas Intermediate: UP 0.5 percent at $114.75 per barrel

Euro/dollar: UP 0.9 percent at $1.0532 from $1.0436 at 2030 GMT Monday

Pound/dollar: UP 1.2 percent at $1.2478 from $1.2323

Euro/pound: DOWN at 84.44 pence from 84.67 pence 

Dollar/yen: UP at 129.29 yen from 129.08 yen

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