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Asia shares gain despite Chinese COVID-19 case numbers rising

Asia shares gain despite Chinese COVID-19 case numbers rising

An investor watches a board showing stock information at a brokerage office in Beijing, China on Oct 8, 2018. (File photo: Reuters/Jason Lee)

SYDNEY: Asian share markets mostly rose on Wednesday (Nov 23) but oil and the dollar slipped as rising COVID-19 cases in China raised fears of fresh lockdowns that could slow the reopening of the world's second-largest economy.

European equities looked set to follow Asia higher, with the pan-region Euro Stoxx 50 futures up 0.33 per cent, Germany's DAX futures up 0.27 per cent and FTSE futures up 0.16 per cent. US stock futures, the S&P 500 e-minis, slipped 0.07 per cent.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 per cent, buoyed by gains in US stocks overnight. The index is up 12 per cent so far this month.

Australian shares were up 0.63 per cent, led by mining and resources giants. Japan's stock market was closed for a national holiday.

New Zealand's central bank raised interest rates by 75 basis points - its largest ever move - on Wednesday to a near 14-year high of 4.25 per cent and flagged more hikes are on the way as it struggles to contain stubbornly high inflation.

Hong Kong's Hang Seng Index was up 0.46 per cent in early trade while China's CSI300 Index was down 0.2 per cent.

China on Wednesday reported 29,157 new COVID-19 infections for Nov 22, compared with 28,127 new cases a day earlier. Case numbers in Beijing and Shanghai are steadily rising, and remain high in several major manufacturing and export hubs, prompting authorities to close some facilities.

"The biggest story for investors in Asia is still the China reopening," said Suresh Tantia, Credit Suisse's senior investment strategist in Singapore.

"We had seen China markets rally up to 20 per cent but those expectations are being dialled back, we think a reopening will be a slower process and will not be done in a hurry. That means a lot of investors are trimming their exposure, cutting their losses or booking any profits they might have made on China."

Meanwhile, the release of US Federal Reserve minutes from its November policy meeting later on Wednesday is being keenly awaited by investors as they look for any sign of discussions about moderating the pace of interest rate hikes.

The November consumer price index will be published on Dec 13, the day before the central bank delivers its final interest rate decision for 2022.

"The Fed is going to be very data driven and they are will need to see more than one softer inflation result because one weaker month in October is not a trend," said Clara Cheong, JPMorgan Asset Management investment strategist.

"If November shows inflation cooling, we still think the Fed will raise by 50 basis points rather than less or showing any signs they are starting a pivot."

In Asian trading, the yield on benchmark 10-year Treasury notes rose to 3.7578 per cent compared with its US close of 3.758 per cent on Tuesday.

The two-year yield, which rises with traders' expectations of higher Fed fund rates, touched 4.5144 per cent compared with a US close of 4.517 per cent.

The dollar rose 0.13 per cent against the yen to 141.43.

The European single currency was up 0.1 per cent on the day at US$1.0313, while the dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was mildly weaker at 107.07.

"The US dollar lost a little of its recent gains (as) central bankers' consensus about how much more interest rates should rise is fraying," Commonwealth Bank analyst Tobin Gorey wrote on Wednesday.

"Smaller or fewer rate rises are perhaps not a cause for optimism, it is cause for less pessimism."

Oil failed to hold on to earlier gains during the Asian session.

It rose initally after top exporter Saudi Arabia said OPEC+ would maintain output cuts and could take further steps to balance the market.

But prices started to fall later in the session. By midday, US crude had dipped 0.19 per cent to US$80.80 a barrel and Brent crude was down 0.3 per cent at US$88.08.

Gold was slightly lower. Spot gold was traded at US$1734.35 per ounce.

While the FTX exchange collapse continues to roil cryptocurrency markets, Bitcoin was up 2.2 per cent in Asian trading hours to US$16,482.

Source: Reuters/st/rc
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