SINGAPORE — Chinese stocks reversed from early declines on Tuesday after falling the previous day, despite Covid fears in China as Beijing expands mass testing.
The Shanghai composite was up nearly 1%, while the Shenzhen component was up 1.31%. The CSI 300 rose 1.41%.
Hong Kong’s Hang Seng index rose 1.86%, continuing the morning’s gains after falling more than 3% the previous day. The Hang Seng Tech Index rose more than 5%.
Earlier, China’s central bank released comments from an interview with the Financial Times, saying it had noticed recent “volatility” in the country’s stock markets, which it said were mainly caused by investor sentiment.
“Currently, my country’s economic fundamentals are sound, the potential for endogenous economic growth is enormous, and significant progress has been made in preventing and mitigating financial risks,” read the English commentary. The People’s Bank of China added that it will step up support for the economy, particularly for industries hard-hit by the pandemic.
Markets reacted negatively to news that Covid was spreading faster in China, prompting fears of additional lockdowns and reduced production. This directly impacted the Asian markets and also impacted the global financial markets.
ANZ research
Brian Martin and Daniel Hynes
Mainland and Hong Kong stocks fell on Monday amid concerns of a Covid surge and potential lockdowns in Beijing. Beijing also announced late Monday that mass testing will be expanded to another 10 districts and one economic development area, according to Reuters.
“Markets reacted negatively to the news that COVID was spreading faster in China, prompting fears of further lockdowns and lower production. This directly impacted Asian markets and impacted global financial markets as well,” ANZ Research analysts Brian Martin and Daniel Hynes wrote in a Tuesday note.
Zhang Zhiwei, chief economist at Pinpoint Asset Management, said he sees risks that China’s GDP could contract in the second quarter.
“Many high-frequency indicators such as mobility, truck loading, thermal coal use show negative growth. It’s not clear where the bottom of this economic slowdown is without a change in the zero-tolerance policy,” he said.
Other Asian markets mixed
Japan’s Nikkei 225 rose 0.65%, while the Topix rose 0.37%. South Korea’s Kospi rose 0.71%.
However, Australian shares fell as trading resumed after a bank holiday on Monday. The S&P/ASX 200 fell nearly 2%.
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Big miners slumped as Rio Tinto plunged more than 3%, Fortescue Metals 6.4% and BHP plunged more than 5%.
MSCI’s broadest index of Asia-Pacific stocks outside of Japan rose about 1%.
As for earnings, HSBC is due to announce its first quarter results.
US stocks were in negative territory earlier in the day but recovered by the close. The Dow Jones Industrial Average trimmed an intraday loss of nearly 500 points on Monday, rising 238.06 points, or 0.7%, to 34,049.46. The S&P 500 rose 0.6% to 4,296.12. The tech-heavy Nasdaq Composite rose 1.3% to 13,004.85.
Currencies and Oil
The US Dollar Index, which tracks the greenback against a basket of its peers, came in at 101.545, extending its rise from just above 101.
The Japanese yen traded at 127.54 per dollar, a tad firmer from above 128.1 previously. The Australian dollar was at $0.7185, trading slightly lower than before at around $0.718.
Oil prices rose in Asian trading on Tuesday morning after falling on Monday as Covid fears in China fueled demand fears.
US crude oil futures traded 0.33% higher to $98.87 a barrel. International benchmark Brent crude futures rose 0.40% to $102.73 a barrel.