Stocks in mainland China on the Shanghai and Shenzen exchanges rose again today as signs of a more flexible approach to COVID-19 management in China grew. A strong hint was given by a China top official, outgoing Vice Premier Sun Chunlan, who said, in part:

  • “As the omicron variant becomes less pathogenic, more people get vaccinated and our experience in Covid prevention accumulates, our fight against the pandemic is at a new stage and it comes with new tasks”. As far as coded comments from China this one is pretty clear that there is some form of relaxation yet to come.

Further impetus was given to risk assets, of course, from Federal Reserve System Chair Powell on Wednesday (US time) who indicated a 50bp point rate hike, not 75, was likely at the December Federal Open Market Committee (FOMC) meeting. The USD continued its fall during Asia trade. EUR, GBP, AUD and NZD all higher. The yen was a strong outperformer, with USD/JPY falling 150-odd points to lows circa 136.50.

There was further poor data from South Korea today. November exports saw their worst decline in 2-1/2 years.

Speaking of poor data, manufacturing PMIs released for Australia, Japan and China all fell in November. With those aforementioned signs of China easing back on the harsh COVID-19 restriction regime perhaps November will be the nadir. Winter is still to come in China though.

Regional equities:

  • Hong Kong’s Hang Seng +1.6%
  • Shanghai Composite +1.%
  • Shenzhen +1.8%
  • Japan’s Nikkei +1.1%

Still to come:

  • 0500 GMT Bank of Japan Governor Haruhiko Kuroda speaks at an Asian Development Bank Institute event
usdyen wrap 01 December 2022