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Stocks Buoyed by China Reopening; Dollar Weakens: Markets Wrap

(Bloomberg) — Equities climbed Tuesday while the dollar declined amid positive sentiment from China’s rollback of Covid isolation measures and the cooling of a key inflation gauge in the US.

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Chinese, Japanese and South Korean shares rose, with travel and consumer goods stocks higher in Tokyo and Seoul after China moved to end quarantine for inbound visitors.

Futures contracts for US and European equities also advanced, supported by data on Friday that showed the Federal Reserve’s preferred price index eased while consumer spending stagnated.

US, Asian and global stocks still remain down about 20% this year, which is the worst annual performance since 2008.

More sustained gains in Asian shares from the reopening of China’s economy will depend on how much money Chinese consumers start to spend and how much this flows through into corporate earnings, Han Jiyoung, an analyst at Kiwoom Securities in Seoul, wrote in a note.

Elsewhere in markets, the outlook for demand from China as the economy reopens boosted the price of oil on Tuesday, along with freezing weather across the US, which prompted refinery closures.

Iron ore surged to its highest since early August. Gold edged higher, trading above $1,800 an ounce as risk assets gained.

The offshore yuan added to its advance overnight on China’s announcement on quarantine. The Thai baht and the South Korean won also appreciated. A gauge of dollar strength declined.

Yields on 10-year US Treasuries inched lower as they resumed trading after increasing the most last week since early April. The yield was around 3.74% on Tuesday.

Equities markets in Hong Kong and Australia remain closed Tuesday.

Key events this week:

  • US wholesale inventories, Tuesday

  • BOJ summary of opinions of Dec. 19-20 meeting, Wednesday

  • US initial jobless claims, Thursday

  • ECB publishes economic bulletin, Thursday

Some of the main moves in markets:

Stocks

  • S&P 500 futures rose 0.6% as of 6:47 a.m. London time

  • Nasdaq 100 futures rose 0.8%

  • Euro Stoxx 50 futures rose 0.8%

  • Japan’s Topix index rose 0.4%

  • South Korea’s Kospi index rose 0.7%

  • The Shanghai Composite rose 1%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.4%

  • The euro rose 0.3% to $1.0664

  • The Japanese yen was little changed at 132.75 per dollar

  • The offshore yuan rose 0.2% to 6.9620 per dollar

  • The British pound rose 0.3% to $1.2100

Cryptocurrencies

  • Bitcoin rose 0.2% to $16,875.07

  • Ether rose 0.6% to $1,223.65

Bonds

Commodities

  • West Texas Intermediate crude rose 0.9% to $80.31 a barrel

  • Spot gold rose 0.4% to $1,805.77 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Youkyung Lee.

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