Global stocks rallied as growing optimism surrounding the easing of coronavirus lockdowns around the world helped investors shrug off concerns over escalating US-China tensions.
Hong Kong’s Hang Seng index added as much as 2 per cent on Tuesday, despite fears around a national security law that Beijing is set to impose on the semi-autonomous territory.
Andy Maynard, a Hong Kong-based trader at China Renaissance, said the market was being supported by purchases from retail investors in mainland China and institutional investors, while liquidity remained thin.
“The problems are still there, obviously, but from a trading [perspective] it looks like we’re in a bit of a risk-on scenario,” said Mr Maynard.
China on Monday sought to reassure international investors that the proposed law, which has sparked mass protests in the Asian financial hub and a sell-off in the local stock market, will improve Hong Kong’s business environment.
But investors are concerned that the law could provoke a backlash from the US as friction increases between Washington and Beijing. Mike Pompeo, US secretary of state, has called the law a “death knell” for autonomy in Hong Kong.
For now, however, “China trade tensions have been pushed off the front pages, crushed beneath the tank tracks of the peak-virus trade’s momentum”, said Jeffrey Halley, senior market analyst at brokerage Oanda, referring to investors’ bullishness on a potential post-pandemic economic recovery.
Elsewhere in the region, Japan’s benchmark Topix index added 2 per cent after Asia’s second-largest economy lifted a nationwide state of emergency designed to control the spread of Covid-19.
South Korea’s Kospi gained 1.7 per cent and Australia’s S&P/ASX 200 added 2.4 per cent. China’s CSI 300 of Shanghai- and Shenzhen-listed stocks climbed 0.8 per cent.
Futures trading pointed to gains for US and UK stocks when both markets reopen later in the day after public holidays on Monday. S&P 500 futures tipped a 1.8 per cent rise for the Wall Street benchmark after the long weekend, while the FTSE 100 was expected to add 2.3 per cent.
The positive sentiment comes as the US’s daily death rate from the coronavirus hovers at its lowest level in about two months. Another 523 people in the US died from Covid-19 over the past 24 hours, according to data compiled on Monday by the Covid Tracking Project — the smallest one-day jump since March 30.
Oil prices were higher with Brent crude, the international benchmark, up 1.9 per cent at $36.21 a barrel. US marker West Texas Intermediate climbed 3.4 per cent to $34.39 a barrel.