Sunday, 29 January, 2023
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Markets diverge after China scraps travel quarantine

Markets diverge after China scraps travel quarantine

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PARIS: European and Asian stock markets advanced on Tuesday but Wall Street fell after China said it would end quarantines for overseas arrivals, spurring hopes for the revival of the world's second-largest economy.

China has abruptly reversed its strict pandemic restrictions even as a surge in infections overtakes the country, reports AFP.

The curbs had torpedoed the economy and sparked nationwide protests.

The latest easing will put an end to three years of border controls on January 8, when Beijing downgrades Covid-19 to a Class B infectious disease.

People in China have since gone rushing to search for overseas flights, with the reopening set to be a boon for the travel industry.

"There is a bit of a buzz in the market because of another move by China to distance itself from the economically damaging zero-Covid policy," said Briefing.com analyst Patrick O'Hare.

China's benchmark Shanghai index and the second index in Shenzhen both posted healthy gains, while Tokyo ended a shade higher with Seoul, Singapore and Mumbai also all up.

Paris and Frankfurt were up in afternoon trades.

Wall Street fell in early trades following the long holiday weekend.

Markets in London, Hong Kong and Sydney were still closed for the holidays.

"Inbound tourism is not a huge economic bounty for China relative to domestic tourism but policy fast-track and early zero-Covid exit means growth could recover enormously," said Stephen Innes of SPI Asset Management.

Markets have also been buoyed by fresh data last week that indicated a slowing of US inflation, as well as an uptick in consumer spending.

But the news was not definitive and all eyes will be on how the Federal Reserve raises interest rates to balance inflationary concerns alongside the possibility of a recession caused by increased borrowing costs.

Following a holiday for commodities traders on Monday, oil continued its surge after a senior official said Russia could cut up to seven percent of its production next year.

Production was also curtailed by freezing conditions in the United States, where more than 1.8 million barrels a day of oil processing capacity in Texas was hit by the extreme weather, according to Bloomberg News.

Both Brent Crude and West Texas Intermediate were up on the supply shortfalls and expectations of renewed demand from China.

"The Chinese reopening news could give a helping hand to oil bulls for an extension of the rally to the $88 pb (per barrel) level," said Ipek Ozkardeskaya, analyst at Swissquote bank.