TOKIO – Asian stocks rose on Monday as investors weighed uncertainties such as the US midterm elections and potential moves by China to ease coronavirus restrictions.
Oil prices fell.
China reported that its trade contracted in October as global demand weakened and anti-virus controls hit domestic consumer spending. Exports fell 0.3% from a year earlier, down from 5.7% growth in September, the customs agency said on Monday. Imports fell 0.7%, compared to expansion of 0.3% in the previous month.
Speculation about a possible relaxation of China’s zero-COVID strategy has had a huge impact on the markets. On Monday, Hong Kong’s Hang Seng Index gained 3.6% to 16,735.26 and Shanghai rose 0.5% to 3,084.87.
But there has been no official confirmation of a major change.
“Over the weekend, Beijing has dashed hopes that China’s reopening is on the horizon, by reaffirming zero COVID policies. And this could induce new caution,” said Tan Boon Heng of Mizuho Bank in Singapore.
In the US, elections on Tuesday will decide control of Congress and key governorships. History suggests that the ruling party may suffer significant losses in midterm elections, and decades-high inflation has become a major problem for Democrats.
Analysts say regional markets may take a wait-and-see approach ahead of the US midterm vote.
Japan’s benchmark Nikkei 225 index jumped 1.3% to 27,554.29 in morning trading. Australia’s S&P/ASX 200 gained almost 0.4% to 6,916.40. South Korea’s Kospi gained 0.7% to 2,364.04.
Shares also rose in Taiwan and India.
Wall Street stocks ended last week with a rally, but only after several times. Market watchers had data on the US labor market to digest, considering what it could mean for interest rates and the odds of a recession.
The S&P 500 posted its first weekly loss in the past three, despite Friday’s gain of 1.4% at 3,770.55. The Dow was up 1.3% at 32,403.22 and the Nasdaq was up 1.3% at 10,475.25. Both also finished with losses for the week.
The unemployment rate rose in October, employers added fewer jobs than the previous month, and worker wage gains slowed somewhat. The slowdown was even more modest than economists expected. Therefore, the Fed is expected to continue raising rates.
Fed Chairman Jerome Powell has called a still active labor market as one of the reasons the central bank may have to raise rates more than previously thought. Such moves could cause a recession.
The two-year Treasury yield fell to 4.68% from 4.72% on Thursday night. The 10-year yield, which helps dictate rates on mortgages and other loans, rose to 4.16% from 4.15%.
In energy trading, benchmark US crude fell $1.29 to $91.32 a barrel. Brent crude, the international standard, fell $1.13 to $97.44 a barrel.
In currency trading, the US dollar rose to 147.22 Japanese yen from 146.65 yen. The euro cost 99.33 cents, compared to 99.60 cents.