Stocks and oil rise as China eases quarantine rules

LONDON (Reuters) – Global stocks rose on Tuesday, while oil prices strengthened after China’s decision to ease some quarantine requirements for international arrivals raised hopes of stronger growth and a recovery in demand for basic commodities.

China has cut quarantine time for incoming travelers by half in a significant easing of one of the world’s strictest restrictions for COVID-19, which has hampered cross-border travel and led to international flights operating at just 2% of pre-pandemic levels. Read more

Asian stocks rose after the announcement and European stocks fell strongly sending the MSCI index of global stocks (.MIWD00000PUS) It is in positive territory and on its way to its fourth consecutive daily gain.

China’s strict non-proliferation regulations have been a drag on activity in the world’s second-largest economy, but easing travel restrictions and reopening major cities from lockdown is boosting optimism that growth can get back on track.

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

“It is not enough to lead to a very strong recovery, but it will certainly be increasingly positive.”

MSCI’s broadest index of Asia Pacific shares (.MIAP00000PUS.) It rose 0.4%, while the Hang Seng Index in Hong Kong (.HSI) Reversing its previous losses to gain 0.9% and the Chinese CSI 300 index (.CSI300) closed by more than 1%. Tourism stocks in China (.CSI930633.) gained more than 5.5%.

stokes 600 pan europe (.stoxx) It rose 0.7% to a two-week high, boosted by oil and gas (.SXEP) and mining (.SXPP) As commodity prices benefited from hopes of a return of demand from China, the largest consumer of metals.

US stock index futures rose with the S&P 500 e-minis up about 0.5%, but the outlook for developed market stocks remains tough as central banks try to offset stubbornly high inflation with slowing growth.

“Equity markets will not be out of danger until central banks shift their rhetoric to a less hawkish stance,” said Salman Page, portfolio manager, cross-asset solutions, at Unigestion.

“Unfortunately for many investors, such a pivot is likely to occur only after the economy has slowed enough to bring inflation onto a sustainable downward path.”

The European Central Bank’s Forum on Central Banks continued in Sintra on Tuesday with European Central Bank President Christine Lagarde confirming plans to start raising interest rates from next month.

Lagarde said the ECB will move gradually when it starts raising interest rates but with the option to act decisively on any deterioration in inflation in the medium term, especially if there are signs of unwinding inflation expectations. Read more

Eurozone government bond yields rose after Lagarde’s comments as investors remained focused on the risks of inflation and monetary tightening, with Germany’s 10-year yield, the bloc’s benchmark, rising 11 basis points at 1.658%.

The euro was little changed against the dollar after Lagarde’s initial comments, while the offshore Chinese yuan rose 0.1% after Beijing’s measures to ease travel restrictions.

The dollar index, which measures the greenback against a basket of six currencies, was little changed at 103.99.

Oil prices swung higher after China eased quarantine rules, already focusing on supply shortages as G7 leaders agreed to study caps on Russian oil and gas import prices. Read more

US crude rose 1.9 percent to $111.65 a barrel. Brent crude jumped 2.3 percent to $117.73 a barrel.

“The news of a lack of supply from the market has boosted (oil),” analysts at the Commonwealth Bank of Australia said. “Political turmoil has reduced supply from two second-tier producers, Ecuador and Libya. Then there is the Russian oil price ceiling proposed by the G7.”

Gold was up 0.1% with spot trading at $1,824 an ounce.

Bitcoin is up 1.4%, trading at $20,989 after dropping to $17,588.88 earlier this month.

Additional reporting by Samuel Indyk in London and Julie Zhou in Hong Kong; Editing by Jacqueline Wong and William MacLean

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