Chinese tech stocks won a reprieve on Wednesday morning with markets across Asia-Pacific rallying higher after punishing losses, as traders digested new lockdowns in the mainland to combat a coronavirus outbreak and braced for the US Federal Reserve to raise rates.
Hong Kong’s Hang Seng Tech index gained as much as 7.3 per cent in the morning after hitting a six-year low on Tuesday. Shares of data center operator GDS Holdings rose as much as 25.5 per cent and ecommerce group JD.com added 14 per cent in the morning. Both stocks suffered heavy losses over a three-session sell-off which saw the Hang Seng Tech index decline 21.8 per cent.
The gains were not enough to reverse the heavy losses. Hong Kong’s benchmark Hang Seng index opened 3 per cent higher, losing nearly 12 per cent of its value in the three prior sessions. China’s CSI 300 opened up 1.7 per cent, after losing 4.6 per cent the day before. Australia’s S & P / ASX 200 gained 1.2 per cent in the morning trading, while Japan’s Topix and South Korea’s Kospi rose as much as 1.4 per cent and 1.1 per cent, respectively.
The moves come ahead of a Federal Open Market Committee meeting that is expected to raise US rates for the first time since 2018, even as the war in Ukraine threatens to exacerbate inflation running at its highest annual rate in 40 years.
Analysts said that the lingering prospect of new coronavirus restrictions across China, which is battling its highest daily caseloads since 2020, could also depress markets.
“Ahead of the FOMC meeting, which will no doubt dominate news tomorrow morning in Asia, the main ‘global’ headline today is the working from home directive in Shanghai,” said analysts at ING, the Dutch bank. .
“This is not a ‘lockdown’ in the strict sense of the word, but it can only be regarded as negative for consumer demand,” they added.
Oil prices rose above $ 100 a barrel on Wednesday morning, with international benchmark Brent crude gaining 0.5 per cent to hit $ 100.45 per barrel, after falling to its lowest close in almost three weeks on Tuesday in response to the threat of fresh lockdowns in China dampening demand . West Texas Intermediate, the US marker, rose 0.3 per cent to $ 96.75.
“Our main concern at this stage is that Covid cases will be found in the Zhoushan port. . . resulting in further supply disruptions to global trade. Realistically, we should probably be prepared for some more weeks if not months of this sort of news as Omicron works its way through China, ”the ING analysts wrote.
Falling oil prices drove US stocks higher on Tuesday. Wall Street’s benchmark S&P 500 ended up the day 2.1 per cent higher, with every market sector rising except energy. The technology-heavy Nasdaq Composite, which is down 17 per cent year-to-date, added 2.9 per cent.
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