Stocks, crude rise as China fears give way to Covid easing hopes

Equities rose with oil prices and the dollar weakened Tuesday as China avoided another night of protests after a weekend of unrest, with speculation growing that officials will announce a further easing of the country's strict Covid containment measures.

The gains were led by a rally in Hong Kong and Shanghai, with property firms enjoying a much-needed surge on the back of moves to ease funding restrictions on troubled developers.

But sentiment was tempered by warnings from top Federal Reserve policymakers that US interest rates would rise further and could go higher than initially thought to fight inflation.

The remarks were partly to blame for big losses of more than one per cent in Wall Street's three main indexes.

China was rocked by demonstrations at the weekend calling for more political freedoms and an end to the country's long-running and economically painful zero-Covid strategy that has seen millions thrown into lockdown for months.

Several arrests were made and security forces were out in force Monday to prevent a repeat of the protests, which were the most widespread since pro-democracy demonstrations were crushed in 1989.

The return of some calm helped Hong Kong stocks rally more than five per cent and Shanghai more than two per cent, with rumbling that the unrest could help push leaders to ease some of the strict containment measures. 

Beijing announced Tuesday afternoon a plan to speed up vaccinations of people aged 60 and older after seeing record daily case numbers in recent days.

Talk of a lighter approach to fighting the disease has helped reopening-linked firms rise, with retailers, cinema chains, Macau casinos and other tourism stocks benefiting.

Property firms were among the best performers after China said it would end a ban on firms raising cash by selling stocks, the latest measure to ease pressure on the sector, which has seen several companies collapse and threatens the wider economy.

Chinese investors were taking "a more pragmatic approach to the current Covid proceedings", said SPI Asset Management's Stephen Innes. "Indeed, a probable outcome is a quicker loosening of restrictions once the current Covid wave and numerous protest flash points subside."

Sydney, Seoul, Singapore, Wellington, Bangkok, Mumbai, Taipei and Manila were also in positive territory, though Tokyo dipped with Jakarta.

London, Paris and Frankfurt all opened on the front foot.

The more upbeat mood saw the dollar drop against its peers, while oil prices rallied on the prospect of a pick-up in demand in China if leaders roll back some of their measures.

Attention is turning to the United States this week with a number of Fed officials due to speak, including boss Jerome Powell, while Friday sees the release of key jobs data, which could provide an idea about the bank's plans for monetary policy.