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Stocks advance, U.S. dollar retreats as China drops quarantine rule

HONG KONG (Reuters) – Stocks fell as the U.S. dollar weakened on Tuesday after China said it would further ease three-year border controls aimed at curbing the novel coronavirus disease (COVID-19). The market has risen.

Starting Jan. 8, China will stop requiring quarantine for incoming travelers, the National Health Commission said Monday. It also reduces the severity of COVID-19 as it becomes less pathogenic and gradually develops into a common respiratory infection.read more

By early Tuesday afternoon in Hong Kong, MSCI’s widest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) was up 0.5%. China’s blue chips he rose 1.1%.

Japan’s Nikkei Stock Average (.N225) was up 0.3% by lunchtime, pushing the index past the week’s mark, buoyed by retailers’ hopes of a return of high-spending Chinese tourists such as Takashimaya. We gave up on the initial ascent that took us all the way to the highs. (8233.T) boosted earnings outlook.

US stock futures, the S&P 500 e-minis, are up 0.6%, signaling a rally in the market as traders return to their terminals on Tuesday after the Christmas break.

Markets in some regions, including Hong Kong and Australia, remain closed on Tuesday.

Global market strategist and JP Morgan Asset Management’s Chaoping Zhu said the latest policy changes out of China indicate that economic activity in most major cities could return to normal very quickly, which is a good indication for investment. Said it was very positive for the house.

“Most cities in China could recover from the first wave of the latest COVID-19 outbreak by January… this will be faster than people expected,” he said, adding that the outbreak It added that there are concerns that the downturn will last longer and weigh on the economy, but its developments are generally better than expected.

He also said China’s reopening, along with the resumption of overseas visits by Chinese tourists, will boost the consumer and service sectors abroad, especially in neighboring Southeast Asia.

Citing internal research, Zhu said many ASEAN countries had seen a 60% to 70% recovery in inbound tourism by November, but there was still a gap between now and pre-pandemic 2019. rice field.

“This gap will be filled by Chinese tourists. This is the final piece of the puzzle,” he said.

Currencies in most emerging Asian countries strengthened as a result, and the dollar fell broadly on Tuesday as risk appetite increased after China scrapped its quarantine rules.

The South Korean won rose about 0.7% to its highest level since June 10.

New Zealand and Australian currencies also rose.read more

Kiwi rose 0.3% to $0.6288 and Australia rose 0.1% to $0.67395. These two currencies are often used as liquid proxies for the Chinese Yuan.

Oil prices rose in thin trading on Tuesday on concerns that winter storms across the United States are affecting the logistics and production of petroleum products and shale oil.read more

Brent crude rose 0.6% to $84.42 a barrel and US West Texas Intermediate crude rose 0.6% to $80.04 a barrel.

US Treasuries resume trading on Friday. The benchmark 10-year yield rose last week to its highest since early April, closing at around 3.75%.

The latest Personal Consumption Expenditure (PCE) price index released on Friday showed that inflationary pressures are easing, but policymakers at the Federal Reserve are optimistic about the strength of the labor market and We remain concerned about the tenacity of wage inflation, which could complicate central bank efforts.Read more

Citi analysts in a report on Friday pointed to upside risks that the Fed’s policy rate could hit 5.25% to 5.50% by the end of 2023. Very tight, with more upward pressure on wages and prices of non-shelter services.

Reported by Xie Yu. Additional reporting by Ankur Banerjee.Edited by Simon Cameron Moore

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