In This Article:
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Hang Seng up 2% to six-month top, yuan tests four-month high
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Yen gains on wagers for BOJ policy shift
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Oil slide a note of caution on near-term demand
By Tom Westbrook
SINGAPORE, Jan 5 (Reuters) - Asian shares rose on Thursday on investor hopes for China's emergence from the COVID-19 pandemic, while the dollar stayed under pressure even as the U.S. Federal Reserve had a warning against market bets on interest rate cuts this year.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1% to touch a four-month high in morning trade. Japan's Nikkei bounced off a three-month low.
China has abruptly dropped ultra-strict curbs on travel and activity, unleashing the virus on the nation's 1.4 billion people. Many funeral homes and hospitals say they are overwhelmed, but investors hope that once the infection waves pass, life and spending can return to normal and are looking beyond the most immediate difficulties.
"China reopening has a big impact...worldwide," said Joanne Goh, an investment strategist at DBS Bank in Singapore, since it not only spurs tourism and consumption but can ease some of the supply-chain crunches seen during 2022.
"There will be hiccups on the way," Goh said, during an outlook presentation to reporters. "We give it six months adjusting to the process. But we don't think it's reversible."
China's central bank also said overnight it will step up financing support to spur domestic consumption and key investment projects and support a stable real estate market.
E-commerce and consumer stocks were among the biggest gainers in Hong Kong, lifting the Hang Seng 2% to a six-month high while reopening hopes have driven China's yuan to four-month highs and supported regional stocks and currencies.
The yuan rose about 0.2% to 6.8750 on Thursday.
China has partially eased an unofficial ban on Australian coal imports and the Australian dollar made a three-week high overnight just below $0.69. It last bought $0.6833.
Oil sounded the loudest note of caution, falling sharply overnight on worries that the near-term outlook is precarious in China and that a global slowdown will hurt demand.
Brent crude futures steadied at $78.42 a barrel on Thursday after dropping 1.5% on Wednesday.
RATES WARNING
Asia's optimism comes while minutes from the Federal Reserve's December meeting, published on Wednesday, contained a caution against late-year rate cuts traders have priced in.
Fed committee members noted that "unwarranted easing in financial conditions" would complicate efforts to restore price stability, the minutes showed.