Asia shares gain despite Chinese COVID-19

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Asian stock markets were mostly in positive territory on Wednesday despite rising COVID-19 cases in mainland China, leaving investors uncertain about how much the new outbreaks could slow the reopening of the world’s second-largest economy.

MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 0.3%, after US stocks ended the previous session with gains. The index is up 12% so far this month.

Australian shares rose 0.7%, with most of the gains coming from mining and resources giants on higher oil prices. The Japanese stock market was closed for a public holiday.

New Zealand’s central bank on Wednesday raised interest rates by 75 basis points – its biggest ever move – to a nearly 14-year high of 4.25% and signaled that further hikes are in sight. underway as it struggles to contain stubbornly high inflation.

Hong Kong’s Hang Seng index rose 0.6% in early trade, while China’s CSI300 index opened broadly flat.

China reported 29,157 new COVID infections for Nov. 22 on Wednesday, according to the National Health Commission, up from 28,127 new cases a day earlier. The number of cases in Beijing and Shanghai is rising steadily, prompting authorities to close some facilities.

“The biggest story for investors in Asia remains the reopening of China,” said Suresh Tantia, senior investment strategist at Credit Suisse in Singapore.

“We had seen Chinese markets climb up to 20%, but those expectations are lowered, we believe a reopening will be a slower process and not rushed. This means many investors are reducing their exposure, cut their losses or book any profits they might have made on China.”

Meanwhile, the release of the US Federal Reserve’s minutes from its November policy meeting later Wednesday is eagerly awaited by investors as they seek insight into how officials view economic conditions.

The Dow Jones Industrial Average rose 1.2% to 34,098.1 on Tuesday, the S&P 500 gained 1.4% to 4,003.58 and the Nasdaq Composite added 1.4% to 11,174.41. Energy stocks led the gains, fueled by rising oil prices.

The yield on the benchmark 10-year Treasuries rose to 3.7578% from its U.S. close of 3.758% on Tuesday.

The two-year yield, which rises on traders’ expectations of a hike in the fed funds rate, touched 4.5227% from a US close of 4.517%.

The dollar lost 0.02% against the yen at 141.21.

Europe’s single currency was up on the day at US$1.0303 (A$1.5514), after gaining 4.26% in a month, while the dollar index, which trails the greenback by against a basket of currencies from other major trading partners, was down at 107.14.

“The US dollar has lost some of its recent gains (as) central bankers’ consensus on the magnitude of interest rate hikes unravels,” wrote Commonwealth Bank analyst Tobin Gorey.

“Smaller or fewer rate hikes may not be cause for optimism, it’s cause for less pessimism.”

Oil remained higher on Wednesday after major exporter Saudi Arabia said OPEC+ would maintain production cuts and may take further steps to balance the market.

In Asian trading, U.S. crude rose 0.3% to US$81.15 (A$122.20) a barrel. Brent crude rose to US$88.35 (A$133.04) a barrel.

Gold was slightly lower. Spot gold was trading at US$1,740.09 (A$2,620.22) an ounce.

As the collapse of the FTX exchange continues to rock cryptocurrency markets, Bitcoin was 0.33% higher during Asian trading hours at US$16,184 (A$24,370).

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