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

Hong Kong led a rally across stock markets Tuesday on hopes that China’s economic hub Shanghai will ease its weeks-long lockdown and gradually reopen businesses.

European exchanges were all strongly higher in afternoon trading and Wall Street’s main indices also snapped higher at the open.

“Hopes that the Shanghai lockdowns will ease, along with the ensuing supply chain disruptions, have been enough to lift” equities, said OANDA analyst Jeffrey Halley.

Much of the 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.

Tuesday’s rally coincides with the third day in a row that Shanghai has recorded no Covid-19 cases outside of its quarantine facilities.

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, surging 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, adding that this was “both from an economic and monetary policy standpoint”.

Analyst Fawad Razaqzada 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 on Tuesday rallied more than one percent versus the dollar 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 as his administration seeks to sell off state assets to bolster tattered public finances.

But it was forced to cut back the offer from a planned five percent after markets turned volatile following Russia’s invasion of Ukraine and China’s Covid lockdowns.

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 1330 GMT –

London – FTSE 100: UP 0.9 percent at 7,532.96 points

Frankfurt – DAX: UP 1.5 percent at 14,179.21

Paris – CAC 40: UP 1.3 percent at 6,427.49 

EURO STOXX 50: UP 1.5 percent at 3,741.44

New York – Dow: UP 1.1 percent at 32,569.43 

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 0.2 percent at $114.50 per barrel

West Texas Intermediate: UP 0.2 percent at $ 114.47 per barrel

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

Pound/dollar: DOWN at $1.262 from $1.2323

Euro/pound: DOWN at 84.52 pence from 84.67 pence

Dollar/yen: UP at 129.66 from 129.08 yen

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