Equities Climbed as China Boosted Sentiment for Asia

Asian shares rose on Tuesday  as investors evaluated China’s efforts to stamp out a Covid outbreak.

Shares in Mainland China, Hong Kong, Japan and South Korea is trading higher. The MSCI Asian Index ex Japan  inched up by 0.24%.

Treasury yields edged up and a dollar gauge fell. Cryptocurrencies weathered the latest stablecoin turbulence, leaving Bitcoin hovering around $30,000.

A challenging global economic outlook amid elevated food and fuel costs and tightening monetary settings also continues to shape sentiment. Oil has jumped to about $114 a barrel and an index of agricultural prices is at a record high.

US data Monday showed New York state manufacturing activity unexpectedly shrank in May for the second time in three months. That followed Chinese figures revealing a collapse in economic activity due to Covid-linked curbs.

The economic reports have fanned concerns of a downturn in the global economy alongside persistent price pressures that are forcing the Federal Reserve and a slew of other central banks to tighten monetary policy.

“With inflation showing little sign of letting up, the Fed is under pressure to accelerate the pace of tightening,” Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, said in a note. Taken together with the impact of Russia’s war in Ukraine and China’s Covid struggles, this backdrop “suggests global growth may be decelerating more quickly than forecast.”

New York Fed President John Williams downplayed deteriorating liquidity conditions in financial markets, saying it was to be expected given rising volatility as investors grapple with uncertainty over global events and shifting U.S. monetary policy.

Elsewhere, Twitter Inc. shares fell Monday after Elon Musk stoked speculation that he could seek to renegotiate his takeover, saying a viable deal at a lower price wouldn’t be “out of the question.”

Crude oil dipped with the WTI trading around $113 and the Brent trading around $113 a barrel.