HONG KONG, Nov 8 (Reuters) – Asian shares rose on Tuesday as U.S. stocks rose overnight ahead of midterm elections and investors jumped on hopes that China is finally relaxing its strict pandemic restrictions even after the government reaffirmed its commitment to a zero-COVID policy. .
Wall Street was sharply higher Monday as investors focused on Tuesday’s midterm elections that will determine control of Congress, while shares of Meta Platforms rose on a report of job cuts at parent Facebook.
MSCI’s gauge of Asia Pacific stocks outside Japan (.MIAPJ0000PUS) was up 0.39% at 0134GMT. Hong Kong’s Hang Seng Index (.HSI) and China’s CSI300 Index (.CSI300) rose 0.3% and 0.14% respectively.
“The thing to watch … will be US averages today and CPI data tomorrow,” Redmond Wong, Saxo Markets market strategist for Greater China, said in a note on Tuesday.
“Markets await the tense situation of a divided Congress and a softening in the US CPI. Both are helping risk sentiment.”
Investors expect China to gradually ease its zero-COVID policy and open up to the world, even after health officials reiterated their commitment to the policy at a press conference on Saturday.
Politics weighed on China’s economic activity, with disappointing trade data on Monday providing the latest sign that the world’s second-largest economy is slowing.
“Investors noted (the fact) that health officials added that local governments should not unnecessarily double down on enforcement and should ensure that people’s livelihoods and economic activities remain normal,” Wong added.
Australia’s S&P/ASX 200 (.AXJO) climbed 0.22%, lifted by financials.
Japan’s Nikkei 225 (.N225) rose 1.33% in early trade to hit an 8-week high.
Overnight, the Dow Jones Industrial Average (.DJI) rose 1.31%, the S&P 500 (.SPX) advanced 0.96% and the Nasdaq Composite (.IXIC) advanced 0.85%.
Analysts said Tuesday’s U.S. midterm elections could weigh on markets.
Control of the U.S. House of Representatives is at stake in the midterms, with Republicans favored by nonpartisan forecasts to win control. read more
“A divided government in Washington appears to be desperate for equity,” said Stephen Innes, managing partner of SPI Asset Management in a note.
“Gridlock controls the ‘worst forces’ of each party, and less active fiscal policy leads to less market volatility. It can be especially helpful in 2022 and 2023 as it calms rate volatility, the main sponsor of this year’s historic cross- asset disease,” he said.
Oil prices rose by 0.06% and Brent by 0.16% after Monday’s loss.
Gold remained flat at $1,673.9 an ounce as investors braced for Wednesday’s key U.S. inflation numbers.
In currency markets, the dollar remained on the back foot with the strength of the Chinese yuan and other currencies sensitive to China’s growth. read more
Reporting by Kane Wu; Editing by Ana Nicolaci da Costa
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