Asian markets track Wall St rally, boosted by China hopes

Asian markets rallied Wednesday, building on a hearty performance on Wall Street and helped by the reopening in China, though analysts continue to warn of near-term volatility caused by surging inflation, rising interest rates and the Ukraine war, AFP reported.

Equities have enjoyed some respite in recent weeks from a painful sell-off caused by central bank monetary tightening — particularly by the Federal Reserve — and a spike in prices that is beginning to hit consumers, raising concerns of an economic slowdown or recession.

A retreat in US Treasury yields provided a lift to New York traders, as did a jump in Chinese firms listed there fuelled by growing optimism that Beijing is to ease back on its long-running crackdown against the tech sector.

The improved mood around tech has come after a report this week said China was close to ending a probe into ride-hailing app Didi Global and restoring its main apps this week.

The Wall Street Journal also said investigations into two other firms — Full Truck Alliance and recruitment platform Kanzhun — were coming to a conclusion.

And on Tuesday authorities approved a second batch of 60 games in a further step to lightening their approach in the world’s largest mobile entertainment market.

Citi analysts said the “announcement will also send a positive signal of policy support to the overall China internet sector”.

Market heavyweights rallied in Hong Kong with Alibaba up more than 10 percent, NetEase 5.7 percent higher and Tencent up more than six percent, helping the Hang Seng Index climb more than two percent.

Shanghai, Tokyo, Sydney, Bangkok, Jakarta Taipei and Manila were also in positive territory. But Seoul and Wellington were barely moved while Mumbai dipped.

But London, Paris and Frankfurt dipped in the morning after opening higher.

The moves in Asia came as Beijing relaxes its strict Covid lockdown measures, allowing the world’s number two economy to edge back into life after months.

All eyes are on the release Friday of US inflation data for a better idea about the Fed’s plans as it hikes borrowing costs.

Officials are expected to lift rates half a point each in June and July with some commentators warning a strong report on Friday could allow them to unveil a three-quarter-point move in September.

Such a move would push the dollar up even further against its peers, with the unit at a 20-year high against the yen.

And observers said that the uncertainty would continue to cause volatility on markets as banks lift borrowing costs. India on Wednesday announced a fresh hike, a day after Australia unveiled an increase that was twice as big as forecast.

The European Central Bank is expected to signal an end to its bond-buying this week, paving the way for a rate hike later on.