Oil prices increased after last week’s slump, while Asian equities dipped in early trading on Tuesday as investors followed overnight volatility on Wall Street.
One of the tightest COVID-19 limits in the world, which has discouraged transit into and out of the nation since 2020, was significantly loosened by China, which cut the quarantine period for incoming travellers in half.
Following the news, Asian markets increased, and European stocks started the day strongly in the green. This put the MSCI benchmark for world equities in the black and put it on course for its fourth straight day of gains.
China’s rigorous zero-COVID policies have slowed down activity in the second-largest economy in the world, but a relaxation of travel restrictions and the lifting of lockdowns in key cities have increased hope that growth may resume.
“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’s definitely going to be positive incrementally.”
“Equity markets will not be out of the woods until central banks shift their rhetoric to a less hawkish (lower interest rates, stimulating economic growth) stance,” said Salman Baig, portfolio manager, cross-asset solutions, at Unigestion
“Unfortunately for many investors, such a pivot will likely not happen until after the economy has slowed down sufficiently to bring inflation on a sustainably downward path.”
Tuesday’s Forum on Central Banking at the European Central Bank’s Sintra headquarters focused on Christine Lagarde’s remarks.
When hiking rates, the ECB will proceed gradually, according to Lagarde, but it will have the flexibility to respond quickly if medium-term inflation worsens, particularly if there are indications of a de-anchoring of inflation expectations.
Following Lagarde’s first remarks, the euro’s value versus the dollar didn’t alter much, while the offshore yuan of China increased by 0.1 percent in response to Beijing’s steps to loosen travel restrictions.
The dollar index, which compares the value of the dollar to a basket of six other currencies, remained stable at 103.97. Following China’s relaxation of quarantine regulations, oil prices increased as attention turned to the limited supply and the G7 leaders’ agreement to research imposing price limitations on Russian oil and gas imports.
American crude increased by 1.41% to $111.08 a barrel. The price of Brent crude increased by 1.3% to $116.59 per barrel.
“A seam of tight supply news bolstered the (oil) market,” said analysts at Commonwealth Bank of Australia. “Political unrest might curtail supply from a couple of second-tier producers, Ecuador, and Libya. And then there’s the G7’s proposed price cap on Russian oil.”
Gold was 0.2% higher with the spot price trading at $1,827 per ounce.
Bitcoin rose 0.8%, trading at $20,870 after falling as low as $17,588.88 earlier this month.
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