Asian stocks extend rally despite growing China COVID concerns

Asian stocks rode a global rally on Thursday, making broad gains as oil prices steadied at lower levels not seen since before Russia’s invasion of Ukraine, though China was an exception as weak data signalled more pressure on the COVID-hit economy, Reuters reported.
Futures markets pointed to the rally extending in Europe later in the session, despite an expected ECB rate hike and worries about an energy crisis. Euro Stoxx 50 futures STXEc1 rose 0.4% and FTSE futures FFIc1 edged up 0.09%.
Japan’s Nikkei share average .N225 jumped 2.18%, breaking through the 28,000 psychological barrier for the first time this month as domestic exporters saw boosts from the weaker yen.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.57%, while Australia’s S&P/ASX 200 .AXJO gained 1.63%.
Chinese blue chips .CSI300 fell 0.12%, however, after the release of worse-than-expected trade data on Wednesday and an extension of the lockdown in the city of Chengdu that demonstrated no let-up in the country’s strict zero-COVID policy.
“Today for Asia it’s really a story of whether zero-COVID will continue to impact the Chinese economy, which will of course have a spillover effect in terms of imports,” said Gary Ng, senior economist at Natixis in Hong Kong.
Hong Kong’s Hang Seng index .HSI fell 0.35%.
All three major Wall Street indices made significant gains overnight as bond yields eased..N
Markets are awaiting a speech by Federal Reserve Chairman Jerome Powell later in the day for signs of any let-up in the central bank’s hawkish approach to tackling inflation.
“I think Powell will signal that the decision for September hasn’t been made yet, but the Fed will remain data dependent,” NatWest Markets analyst Jan Nevruzi wrote in a note.
CME Group’s Fedwatch tool currently shows that expectations for a third successive 75-basis-point interest rate hike are at about 76%, up from 69% a week ago.