Stocks in Asia advanced on Monday after China eased some virus curbs and Wall Street had its best week since November 2020.
Shares in Mainland China, Hong Kong, Thailand, South Korea and Japan rose parring losses from last week.
China’s yuan outperformed after the nation reported fewer Covid-19 cases in Beijing and Shanghai. That spurred the government to ease some of the strict virus controls to stimulate sagging growth. Chinese stocks had more modest gains.
The dollar slipped for a third day versus major peers as havens lost their appeal amid the improved mood. Oil traded near $116 a barrel as the European Union failed to agree on a revised package of Russian sanctions. Cash Treasuries won’t trade in Asia because of the US Memorial Day holiday.
Trader are pondering whether the bottom of the selloff is near as investors have been buying the dip after one of the worst starts to the year for equities. However, a wall of worries remains from hawkish central banks underscoring fears of a recession, escalating food inflation from the war in Ukraine and China’s lockdowns stunting economic activity.
“We are in the middle of a bear market rally,” said Mahjabeen Zaman, Citigroup Australia head of investment specialists, said on Bloomberg Television. “I think the market is going to be trading range bound trying to figure out how soon is that recession coming or how quickly is inflation going down.” She added that Treasury yields are set to peak this year.
Traders will be looking to the US payroll numbers later this week to gauge the Federal Reserve’s tightening path as it strives to rein in inflation. Meanwhile, the Fed is set to start shrinking its $8.9 trillion balance sheet starting Wednesday.
Crude oil inched up sharply with the WTI trading around $116 and the Brent trading around $120 a barrel.