Asia stocks rise on optimism over easing of COVID restrictions

TOKYO (AP) – Asian stocks gained across the board on Monday as buying picked up after a US national holiday pause.

Analysts said the optimism could be driven by expectations that the US might decide to lower Chinese tariffs, a welcome move that would also help tame inflation.

China’s Commerce Ministry said on Tuesday that Vice Premier Liu He had talks with Finance Minister Janet Yellen about coordinating economic policies between the two largest economies and maintaining supply chain stability.

A statement also said the Chinese side “expressed its concerns over issues such as the lifting of additional tariffs and sanctions imposed by the United States on China and the fair treatment of Chinese companies.” The two sides agreed that said to continue their talks.

Investors have also been heartened by the lifting of restrictions related to the coronavirus pandemic across the region, including in Japan, which had seen a boom in foreign tourists before the pandemic.

“Yesterday’s quiet economic calendar prompts sentiment to focus on the lone easing headline of a possible US tariff relaxation decision, which could risk a sharp fall in speculative bullish bets in the event of inaction ‘to tame inflation,'” Yeap said Jun Rong, a market strategist at IG in Singapore, in a comment.

However, risks remain due to inflation and slowing economic activity in some countries. A resurgence of COVID-19 infections in Europe, the US and parts of Asia is also emerging, threatening a reversal of pandemic precautions.

Japan’s benchmark Nikkei 225 was up nearly 1.0% to 26,404.90 in morning trade. Australia’s S&P/ASX 200 rose 0.3% to 6,632.00. South Korea’s Kospi rose 1.8% to 2,342.24. Hong Kong’s Hang Seng was up 0.8% to 21,997.04, while the Shanghai Composite was up 0.1% to 3,409.95.

Market participants are also awaiting a rate decision from the Reserve Bank of Australia. It is expected to raise interest rates by 50 basis points. Minutes of the US Federal Reserve’s latest monetary policy meeting will also be released on Wednesday and could provide clues to future policy.

Global investors were concerned about rising inflation and the possibility that higher interest rates could trigger a recession in some economies. US trade was closed Monday for Independence Day.

Futures for the Dow Industrials and the S&P 500 both rose 0.4% early Tuesday.

Stocks ended the week rallied, with the S&P 500 up 1.1%. The Dow was up 1% and the Nasdaq was up 0.9%. The Russell 2000 index of smaller companies rose 1.2%.

In the first half of this year, the S&P 500 posted its worst performance since the first six months of 1970. It is now 20.2% below its peak earlier this year.

The risk of a recession looms as the US Federal Reserve aggressively hikes interest rates. The Fed is raising rates to intentionally slow economic growth and cool inflation, but could potentially go too far and trigger a recession.

In Germany, Chancellor Olaf Scholz gathered top representatives from employers and unions in his Berlin office on Monday to explore ways to deal with the impact of rising prices while preventing a spiral of inflation in Europe’s largest economy.

In energy trading, the US crude benchmark rose $1.87 to $110.30 a barrel. It rose $2.67 to $108.43 a barrel on Friday. Trading was closed on Monday. Brent crude, the international standard, fell 3 cents to $113.47 a barrel.

In forex trading, the US dollar rose to 136.15 Japanese yen from 135.69 yen. The euro cost $1.0434 versus $1.0423.


Yuri Kageyama is on Twitter

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