Stocks, oil rise as China eases quarantine rules

Stocks, oil rise as China eases quarantine rules
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LONDON, June 28 (Reuters) – Global equities moved into positive territory on Tuesday as oil prices firmed after China decided to ease some quarantine requirements for international arrivals, raising hopes of stronger growth and a revival in demand for raw materials.

China has halved the quarantine period for inbound travelers in a major easing of one of the world’s toughest COVID-19 restrictions, which has prevented travel in and out of the country since 2020. Continue reading

Asian equities rose on the announcement and European equities opened firmly in the green, sending the MSCI benchmark for global equities (.MIWD00000PUS) into positive territory and on course for his fourth straight day win.

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China’s strict zero-COVID regulations have hampered activity in the world’s second-biggest economy, but an easing of travel restrictions and the reopening of major cities after lockdown are boosting optimism that growth can get back on track.

“This is a good step forward,” said Hani Redha, multi-asset portfolio manager at PineBridge Investments.

“It’s not enough to lead to a very robust recovery, but it will definitely be incrementally positive.”

MSCI’s most comprehensive index of Asia Pacific equities (.MIAP00000PUS) rose 0.3%, while Hong Kong’s Hang Seng (.HSI) reversed earlier losses and rose 0.7% and China’s CSI 300 Index (.CSI300) gained over 1%. China tourism stocks (.CSI930633) increase by more than 5.5%.

The pan-European STOXX 600 (.STOXX) up 0.6%, driven by oil & gas and mining stocks, but the outlook for developed market equities remains difficult as central banks try to offset stubbornly high inflation with slowing growth.

“Equity markets won’t get out of the woods until central banks shift their rhetoric to a less hawkish stance,” said Salman Baig, portfolio manager, cross-asset solutions, at Unigestion

“Unfortunately, for many investors, such a turnaround is likely to occur only after the economy has slowed enough to put inflation on a sustained declining path.”

The European Central Bank’s Central Bank Forum in Sintra continued on Tuesday with a speech by ECB President Christine Lagarde.

Lagarde said the ECB would take a gradual approach once it starts raising rates, but with the option to react decisively to any deterioration in medium-term inflation, particularly if there are signs of inflation expectations unanchoring. Continue reading

Euro-zone government bond yields remained near their highs following Lagarde’s comments, with Germany’s 10-year yield, the benchmark for the bloc, rising 8 basis points to 1.63%.

The euro was slightly changed against the dollar after Lagarde’s initial comments, while China’s offshore yuan rose 0.1% following Beijing’s moves to ease travel restrictions.

The dollar index, which measures the greenback against a basket of six currencies, was slightly changed at 103.97.

Oil prices rose after China eased quarantine rules, with the focus already on tight supplies as G7 leaders agreed to explore imposing price caps on Russian oil and gas imports. Continue reading

US crude rose 1.41% to $111.08 a barrel. Brent crude rose 1.3% to $116.59 a barrel.

“A flurry of tight supply news supported the (oil) market,” said analysts at the Commonwealth Bank of Australia. “Political unrest could limit supply from two second-tier producers, Ecuador and Libya. And then there is the G7 price cap on Russian oil.”

Gold was up 0.2% with spot trading at $1,827 an ounce.

Bitcoin is up 0.8% to trade at $20,870 after falling as low as $17,588.88 earlier this month.

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Reporting by Samuel Indyk in London and Julie Zhu in Hong Kong; Editing by Jacqueline Wong

Our standards: The Thomson Reuters Trust Principles.

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