Markets rise after China scraps travel quarantine

European and Asian stock markets advanced on Tuesday but Wall Street wavered after China said it would end quarantines for overseas arrivals, spurring hopes for the revival of the world’s second-largest economy.

China has abruptly reversed its strict pandemic restrictions even as a surge in infections overtakes the country.

The curbs had torpedoed the economy and sparked nationwide protests.

The latest easing will put an end to nearly three years of border controls on January 8, when Beijing downgrades Covid-19 to a Class B infectious disease.

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Reopening

People in China have since gone rushing to search for overseas flights, with the reopening set to be a boon for the travel industry.

“There is a bit of a buzz in the market because of another move by China to distance itself from the economically damaging zero-Covid policy,” said Briefing.com analyst Patrick O’Hare. 

China’s benchmark Shanghai index and the second index in Shenzhen both posted healthy gains, while Tokyo ended a shade higher with Seoul, Singapore and Mumbai also all up.

Paris and Frankfurt also closed higher.

Wall Street figures

But Wall Street was mixed after a long holiday weekend. The Dow Jones Industrial Average was up 0.5 percent in midday trading while the tech-heavy Nasdaq shed 0.7 percent and the S&P 500 fell 0.1 percent.

Markets in London, Hong Kong and Sydney were still closed for the holidays.

“Inbound tourism is not a huge economic bounty for China relative to domestic tourism but policy fast-track and early zero-Covid exit means growth could recover enormously,” said Stephen Innes of SPI Asset Management.

Markets have also been buoyed by fresh data last week that indicated a slowing of US inflation, as well as an uptick in consumer spending.

But the news was not definitive and all eyes will be on how the Federal Reserve raises interest rates to balance inflationary concerns alongside the possibility of a recession caused by increased borrowing costs.

Oil up

Elsewhere, oil prices jumped following the announcement by China — which is the world’s biggest importer of crude — and a Russian decree banning exports to countries complying with a price cap on its crude.

The price ceiling was imposed by Western nations as part of efforts to slash a major source of revenue for Russia. 

Brent North Sea crude, the international oil benchmark, and the US West Texas Intermediate contract were both up by around 1.5 percent.

Key figures

New York – Dow: DOWN 0.5 percent at 33,358.54 points

Frankfurt – DAX: UP 0.4 percent at 13,995.10 (close)

Paris – CAC 40: UP 0.7 percent at 6,550.66 (close)

EURO STOXX 50 – UP 0.4 percent at 3,832.89

Tokyo – Nikkei 225: UP 0.2 percent at 26,447.87 (close)

Shanghai – Composite: UP 1.0 percent at 3,095.57 (close)

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