Asia Business

Markets fell Tuesday and the yen rallied after Japan announced a surprise tweak to its ultra-loose monetary policy, just as traders were fretting that central bank efforts to tame inflation will tip economies into recession.

Sentiment was also being weighed down by a spike in Covid infections in China as officials roll back many of the strict containment measures that have been in place for almost three years.

A so-called Santa rally appears to be eluding investors, with the mood dampened by last week’s warnings from the Federal Reserve and European Central Bank that they will likely push interest rates higher than expected next year.

The remarks dealt a blow to a short rally across equities that had been fuelled by data showing inflation coming down.

Adding to the selling pressure were comments from former New York Fed chief William Dudley, who told Bloomberg Television that any sign of optimism in markets could make monetary policymakers tighten even more.

Tokyo sank more than two percent after the Bank of Japan adjusted its parameters for controlling bond yields, in a shift away from its long-running dovish stance of keeping rates ultra-low to boost the struggling economy.

Inflation in Japan has risen sharply this year, with the consumer price index in October at 3.6 percent, the highest in four decades, though bank boss Haruhiko Kuroda and other officials have said that would be temporary, citing a lack of strong demand and wage rises.

The move sent the yen to 132.30 per dollar, its strongest level since August.

The Japanese unit has been hobbled this year by the BoJ’s determination to stick to its loose monetary policy — hitting a 32-year low of around 150 to the dollar in October — even as the Fed ramped up borrowing costs. 

– No Santa rally –

“This was bound to happen with inflation rising in Japan, it’s just happened sooner than many thought,” Amir Anvarzadeh, of Asymmetric Advisors, said. “It could spark money flowing back into Japan.”

Hong Kong, Shanghai, Sydney, Seoul, Singapore, Wellington, Taipei, Mumbai, Jakarta and Bangkok were also in the red.

London, Paris and Frankfurt all sank at the open.

“Those who were in the camp of a year-end rally are now second-guessing their investment thesis,” said JC O’Hara of MKM Partners.

“The markets may have placed a little too much faith in Santa Claus and the rally he typically brings.”

With few catalysts to drive trade, investors are winding down for the Christmas break, though they are keeping a close eye on developments in China, which is suffering a sharp jump in Covid cases.

Officials in recent weeks have started to move away from their rigid zero-Covid policy of lockdowns and mass testing following widespread protests.

And while the shift has been welcomed as a much-needed boost to the world’s number-two economy, there is growing anxiety about the immediate impact on businesses and the healthcare system.

“A massive China reopening bounce is giving way to a reality check as investors come to grips with numerous zero-Covid offramp economic and medical issues that China is simply unprepared to handle,” said SPI Asset Management’s Stephen Innes.

“Especially if the predicted 10 million-plus daily Covid cases hit the healthcare system later this month.”

Still, the expected pick-up in demand from the China reopening continues to support commodity prices, with both main oil contracts up more than one percent, extending Monday’s gains.

The impact of Covid and weaknesses in the country’s vast property sector led the World Bank on Tuesday to slash its China growth forecasts to 2.7 percent this year, from 4.3 percent predicted in June. It also revised its forecast for next year from 8.1 percent down to 4.3 percent. 

– Key figures around 0820 GMT –

Tokyo – Nikkei 225: DOWN 2.5 percent at 26,568.03 (close)

Hong Kong – Hang Seng Index: DOWN 1.3 percent at 19,094.80 (close)

Shanghai – Composite: DOWN 1.1 percent at 3,073.77 (close)

London – FTSE 100: DOWN 0.7 percent at 7,312.94

Dollar/yen: DOWN at 132.39 yen from 136.95 yen on Monday

Euro/dollar: UP at $1.0623 from $1.0610 

Pound/dollar: DOWN at $1.2146 from $1.2148

Euro/pound: DOWN at 87.44 pence from 87.31 pence

West Texas Intermediate: DOWN 0.2 percent at $75.07 per barrel

Brent North Sea crude: DOWN 0.3 percent at $79.58 per barrel

New York – Dow: DOWN 0.5 percent at 32,757.54 (close)

Japan’s central bank tweaked its longstanding monetary easing programme on Tuesday, in a surprise move that saw the yen strengthen quickly against the dollar and prompted falls on Tokyo bourses.

The change marks a rare shift of gears for the dovish central bank, which has largely left its policy intact even as counterparts in other major economies hike rates to tackle inflation.

After a two-day policy meeting, the bank said it would widen the band in which it would allow rates for 10-year Japan government bonds to move, saying it would “improve market functioning”.

“The Bank will expand the range of 10-year JGB yield fluctuations from the target level: from between around plus and minus 0.25 percentage points to between around plus and minus 0.5 percentage points,” it said in a statement.

The move saw the yen strengthen rapidly against the dollar, with the greenback falling from a daily high of 137 yen to 133 yen within minutes of the decision.

The announcement came during the morning break in Tokyo trade, but the key Nikkei 225 index plunged as it reopened, falling as much as three percent before recovering slightly.

Few had anticipated the shift, with all 47 of the economists surveyed by Bloomberg ahead of the decision saying they expected no change in policy.

The bank left the rest of its longstanding loose monetary programme intact, including its years-old inflation target of two percent.

Governor Haruhiko Kuroda, whose term ends next spring, has for years struggled to steer the world’s third largest economy towards sustained two percent inflation, seen as necessary for growth.

Prices in Japan have risen sharply this year, with the consumer price index in October at 3.6 percent, the highest in four decades.

But Kuroda and the central bank consider the increases temporary, citing a lack of strong demand and wage rises.

Speaking to reporters on Tuesday afternoon, Kuroda insisted the shift “is not the first step of an exit strategy”.

“Once the price stability target draws closer, the monetary policy board will discuss strategies toward the exit and will make information public accordingly,” he said.

– ‘A sense of policy flexibility’ –

Still, the BoJ has come under pressure to move away from its ultra-loose policy as central banks in other major economies hike interest rates to tackle inflation.

The resulting differential has seen the yen nosedive about 20 percent against the dollar this year.

Hideo Kumano, chief economist at Dai-ichi Life Group, said the decision showed the bank recognised its existing policy was no longer tenable.

“It has been unrealistic to try to cap the long-term yield with the fixed-rate bond-buying operations at 0.25 percent,” he told AFP.

“It seems to me that the bank wanted to create a little bit of a sense of policy flexibility or room for policy choices and pass the baton to the next governor,” he added.

Kuroda’s term ends in April, and over the weekend reports suggested Japan’s government could work with his successor to move away from the longstanding two-percent price target.

The bank’s decision Tuesday sent shockwaves through Asian markets, with stocks falling on regional bourses as investors digested the news.

“In reality, the long-term rate will become 0.5 percent. It will reduce the rate gap between Japan and the US,” said Kumano.

But Kuroda was at pains to insist “this is not a rate hike”.

Saisuke Sakai, chief economist of Mizuho Research & Technologies, said the move would help address the weaker yen caused by the growing gulf between US and Japanese central bank policy.

But “unlike rate hikes by the Fed and European central banks aimed at cooling down overheated economies… this is aimed chiefly at stabilising market function,” he told AFP.

“Japan’s economy has not recovered to the pre-pandemic level yet, in contrast to the US economy,” he noted.

Hong Kong’s stock exchange is on track for its weakest year since 2012 for new listings as the city reeled from the pandemic, rising interest rates and China’s economic uncertainty, according to data released Tuesday.

Hong Kong Exchanges and Clearing (HKEX) said this year it had 69 new listings raising HK$87.8 billion ($11.3 billion) as of November 30, down 74 percent from the year before.

The bourse said “renewed momentum” in the second half of the year accounted for nearly two-thirds of the IPOs, following a slump during the city’s worst-ever coronavirus outbreak.

“The macroeconomic and geopolitical backdrop led to weak sentiment and softness in the global IPO market,” the exchange said.

The latest figures were a steep drop from peak levels in 2020 when IPOs raised HK$400 billion, as Hong Kong benefited from the bonanza of Chinese mega-companies opting to list closer to home.

Before the pandemic Hong Kong’s bourse was often crowned as the top IPO venue in the world, drawing more than 100 new listings annually between 2013 and 2020.

HKEX shares have lost 28.3 percent since the start of the year while the city’s flagship Hang Seng Index is down 18 percent.

But both have seen a rebound in the past six weeks. 

As China pivots towards reopening, bankers and analysts expect a slew of mid-sized Hong Kong deals in the first quarter will drive a recovery in listings.

“With the transition toward a reopening, we anticipate several delayed Chinese IPOs and follow-on transactions to occur in the near term,” Murli Maiya of JPMorgan Chase in Hong Kong told Bloomberg News.

Victoria Lloyd, a partner in Baker McKenzie’s Hong Kong office, said she expected the IPO pipeline to pick up after Chinese New Year.

“With China opening up, everyone is hoping that next year will be a better year — because there is a solid IPO pipeline, with a series of companies that have submitted applications for listings or are waiting to do so,” Lloyd told Bloomberg.

HKEX said Tuesday that it had bolstered its popular “Connect” franchise this year that links to bourses in Shanghai and Shenzhen, which will soon extend to interbank interest rate swap markets.

This year Hong Kong also saw the listing of four special purpose acquisition companies (SPACs) — investment vehicles sometimes called “blank cheque” companies.

HKEX started to allow SPAC listings this year, subject to a strict framework, in a bid to boost competitiveness following in the steps of regional rival Singapore.

But SPACs have largely fallen out of favour this year on Wall Street amid rising inflation, interest rate hikes and a looming recession.

A junta court will hear the final arguments in the 18-month-long trial of Myanmar’s Aung San Suu Kyi next week, a legal source said Tuesday, before reaching its final verdicts against the Nobel laureate.

Suu Kyi has been a prisoner since the military toppled her government in February 2021, ending the Southeast Asian nation’s brief period of democracy.

She has been convicted on 14 charges, ranging from corruption to illegally possessing walkie-talkies and flouting Covid restrictions.

The junta court will hear “final arguments” from both sides related to five remaining charges of corruption on December 26, according to a source with knowledge of the case.

“The verdict will be given after that stage,” the source said, adding a date had not yet been set.

Suu Kyi, 77, appeared in good health, the source said.

Each corruption charge carries a maximum jail term of 15 years. 

Journalists have been barred from attending the court hearings and Suu Kyi’s lawyers have been banned from speaking to the media.

In June, she was transferred from house arrest in military-built Naypyidaw to a prison compound, where her trial continues at a special court.

The military alleged widespread voter fraud during the November 2020 election, won resoundingly by Suu Kyi’s National League for Democracy party, although international observers said the poll was largely free and fair.

Myanmar has been in turmoil since the coup, with over 2,500 killed in the military’s crackdown on dissent, according to a local monitoring group.

The World Bank on Tuesday slashed its China growth forecast for the year as the pandemic and weaknesses in the property sector hit the world’s second largest economy.

In a statement, the institution slashed its forecast to 2.7 percent from 4.3 percent predicted in June. It also revised its forecast for next year from 8.1 percent down to 4.3 percent.

Both figures are well below Beijing’s GDP growth target of around 5.5 percent for the year, a figure many analysts believe is now unattainable.

“Economic activity in China continues to track the ups and downs of the pandemic — outbreaks and growth slowdowns have been followed by uneven recoveries,” the World Bank said. 

“Real GDP growth is projected to reach 2.7 percent this year, before recovering to 4.3 percent in 2023, amid a reopening of the economy.” 

After years of sudden lockdowns, mass testing, long quarantines and travel restrictions, China this month abruptly abandoned its zero-Covid policy. 

But disruption to businesses has continued as cases surge and some restrictions remain in place.

Health authorities have admitted that official figures no longer capture the full picture of domestic infections now that mass testing requirements have been dropped.

“Continued adaptation of China’s Covid-19 policy will be crucial, both to mitigate public health risks and to minimise further economic disruption,” Mara Warwick, World Bank Country Director for China, Mongolia and Korea, said. 

Last week the IMF warned it too would likely downgrade its projections for China again, blaming a predicted continued rise in cases. 

The fund cut its growth projection for China in October to 3.2 percent this year — the lowest in decades — while expecting growth to rise to 4.4 percent next year.

But “very likely, we will be downgrading our growth projections for China, both for 2022 and for 2023”, IMF chief Kristalina Georgieva told AFP. 

– Other stresses –

Experts fear China is ill-equipped to manage the exit wave of infections as it presses ahead with reopening, with millions of vulnerable elderly people still not fully vaccinated.

“Accelerated efforts on public health preparedness, including efforts to increase vaccinations especially among high-risk groups, could enable a safer and less disruptive reopening,” Warwick said. 

The economy is under pressure on other fronts, too. 

“Persistent stress” in the real estate sector — which accounts for about a quarter of annual GDP — could have wider macroeconomic and financial effects, the World Bank noted.

And it added that youth unemployment, the risks from extreme weather caused by climate change and the wider global slowdown also threatened growth.

The world economy is being battered by surging interest rates aimed at fighting runaway inflation that has been triggered by Russia’s war in Ukraine as well as global supply chain snarls.

Beijing has sought to mitigate low growth with a series of easing measures to provide support, slashing key interest rates and pumping cash into the banking system. 

“Directing fiscal resources towards social spending and green investment would not only support short-term demand but also contribute to more inclusive and sustainable growth in the medium term,” said the World Bank’s Lead Economist for China Elitza Mileva.

Japan’s central bank tweaked its longstanding monetary easing programme on Tuesday, in a surprise move that saw the yen strengthen quickly against the dollar while Tokyo stock markets fell.

The change marks a rare shift of gears for the dovish central bank, which has largely left its policy intact even as counterparts in other major economies hike rates to tackle inflation.

After a two-day policy meeting, the bank said it would widen the band in which it would allow rates for 10-year Japan government bonds to move, saying it would “improve market functioning”.

“The Bank will expand the range of 10-year JGB yield fluctuations from the target level: from between around plus and minus 0.25 percentage points to between around plus and minus 0.5 percentage points,” it said in a statement.

The move saw the yen strengthen rapidly against the dollar, with the greenback falling from a daily high of 137 yen to 133 yen within minutes of the decision.

The announcement came during the morning break in Tokyo trade, but the key Nikkei 225 index plunged as it reopened, falling as much as three percent before recovering slightly.

Few had anticipated the shift, with all 47 of the economists surveyed by Bloomberg ahead of the decision saying they expected no change in policy.

The bank left the rest of its longstanding loose monetary programme intact, including its years-old inflation target of two percent.

Governor Haruhiko Kuroda, whose term ends next spring, has for years struggled to steer the world’s third largest economy towards sustained two percent inflation, seen as necessary for growth.

Prices in Japan have risen sharply this year, with the consumer price index in October at 3.6 percent, the highest in four decades.

But Kuroda and the central bank consider the increases temporary, citing a lack of strong demand and wage rises.

– ‘A sense of policy flexibility’ –

Still, the BoJ has come under pressure to move away from its ultra-loose policy as central banks in other major economies hike interest rates to tackle inflation.

The resulting differential has seen the yen nosedive about 20 percent against the dollar this year.

Hideo Kumano, chief economist at Dai-ichi Life Group, said the decision showed the bank recognised its existing policy was no longer tenable.

“It has been unrealistic to try to cap the long-term yield with the fixed-rate bond-buying operations at 0.25 percent,” he told AFP.

“It seems to me that the bank wanted to create a little bit of a sense of policy flexibility or room for policy choices and pass the baton to the next governor,” he added.

Kuroda’s term ends in April, and over the weekend reports suggested Japan’s government could work with his successor to move away from the longstanding two-percent price target.

The bank’s decision Tuesday sent shockwaves through Asian markets, with stocks falling on regional bourses as investors digested the news.

“In reality the long-term rate will become 0.5 percent. It will reduce the rate gap between Japan and the US,” said Kumano.

Saisuke Sakai, chief economist of Mizuho Research & Technologies, said the move would help address the weaker yen caused by the growing gulf between US and Japanese central bank policy.

But “unlike rate hikes by the Fed and European central banks aimed at cooling down overheated economies… this is aimed chiefly at stabilising market function,” he told AFP.

“Japan’s economy has not recovered to the pre-pandemic level yet, in contrast to the US economy,” he noted.

Japan’s central bank tweaked its longstanding monetary easing programme on Tuesday, in a surprise move that saw the yen strengthen quickly against the dollar while Tokyo stock markets fell.

After a two-day policy meeting, the bank said it would widen the band in which it would allow rates for 10-year Japan government bonds to move, saying it would “improve market functioning”.

“The Bank will expand the range of 10-year JGB yield fluctuations from the target level: from between around plus and minus 0.25 percentage points to between around plus and minus 0.5 percentage points,” it said in a statement.

The move saw the yen strengthen rapidly against the dollar, with the greenback falling from a daily high of 137 yen to 133 within minutes of the decision.

The announcement came during the morning break in Tokyo trade, but the key Nikkei 225 index plunged as it reopened, falling more than two percent.

The Bank of Japan left the rest of its longstanding loose monetary policy intact, including its years-old inflation target of two percent.

Governor Haruhiko Kuroda, whose term ends next spring, has for years struggled to steer the world’s third largest economy towards sustained two percent inflation, seen as necessary for growth.

Prices in Japan have risen sharply this year, with the consumer price index in October at 3.6 percent, the highest in four decades.

But Kuroda and the central bank consider the increases temporary, citing a lack of strong demand and wage rises.

Still, the BoJ has come under pressure to move away from its ultra-loose policy as central banks in other major economies hike interest rates to tackle inflation.

The resulting differential has seen the yen nosedive about 20 percent against the dollar this year.

Most markets fell in Asia on Tuesday following a sell-off in New York as traders fret that central bank efforts to tame inflation will tip economies into recession.

Sentiment was also being weighed down by a spike in Covid infections in China as officials roll back many of the strict containment measures that have been in place for almost three years.

A so-called Santa rally appears to be eluding investors, with the mood dampened by last week’s warnings from the Federal Reserve and European Central Bank that they will likely push interest rates higher than expected next year.

The remarks dealt a blow to a short rally across equities that had been fuelled by data showing inflation coming down.

Adding to the selling pressure were comments from former New York Fed chief William Dudley, who told Bloomberg Television that any sign of optimism in markets could make monetary policymakers tighten even more.

In early trade, Hong Kong led losses with tech firms tracking a sell-off in US giants including Amazon and Apple, while Shanghai, Sydney, Seoul, Singapore, Wellington, Taipei, Manila and Jakarta were also in the red.

However, Tokyo edged up slightly ahead of a Bank of Japan policy decision later in the day.

“Those who were in the camp of a year-end rally are now second-guessing their investment thesis,” said JC O’Hara of MKM Partners.

“The markets may have placed a little too much faith in Santa Claus and the rally he typically brings.”

With few catalysts to drive trade, investors are winding down for the Christmas break, though they are keeping a close eye on developments in China, which is suffering a sharp jump in Covid cases.

Officials last month started to move away from their rigid zero-Covid policy of lockdowns and mass testing following widespread protests.

And while the shift has been welcomed as a much-needed boost to the world’s number-two economy, there is growing anxiety about the immediate impact on businesses and the healthcare system.

“A massive China reopening bounce is giving way to a reality check as investors come to grips with numerous zero-Covid offramp economic and medical issues that China is simply unprepared to handle,” said SPI Asset Management’s Stephen Innes.

“Especially if the predicted 10 million-plus daily Covid cases hit the healthcare system later this month.”

Still, the expected pick-up in demand from the China reopening continues to support commodity prices, with both main oil contracts up more than one percent, extending Monday’s gains.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 0.3 percent at 27,315.54 (break)

Hong Kong – Hang Seng Index: DOWN 0.6 percent at 19,242.72

Shanghai – Composite: DOWN 0.4 percent at 3,099.38

Euro/dollar: DOWN at $1.0607 from $1.0610 on Monday

Pound/dollar: UP at $1.2153 from $1.2148

Euro/pound: DOWN at 87.28 pence from 87.31 pence

Dollar/yen: UP at 137.27 yen from 136.95 yen

West Texas Intermediate: UP 1.2 percent at $76.12 per barrel

Brent North Sea crude: UP 1.2 percent at $80.73 per barrel

New York – Dow: DOWN 0.5 percent at 32,757.54 (close)

London – FTSE 100: UP 0.4 percent at 7,361.31 (close)

Expectations heading into a UN biodiversity conference in Montreal were about as low as they could be. 

But a broad recognition that it was now or never for nature — and a flurry of late diplomacy by China —  helped seal a “historic” deal on a night of high drama.

Dubbed the “ugly duckling” of global policy, the COP15 negotiations were snubbed by world leaders who had just attended a far higher-profile climate summit in Egypt.

Beijing, which held the presidency of the talks, at first appeared to have a hands-off approach, and the defining issue — whether the rich world would pledge enough money so their developing counterparts could protect vanishing species and habitats — seemed too great to surmount.

“For months, there was the question: Where is China?” a high-level source close to the matter told AFP.

What’s more, relations between China and Canada, which had to step in to host the event because of China’s strict Covid rules, have deteriorated in recent years.

Canada’s 2018 arrest of Chinese telecommunications executive Meng Wanzhou at the request of the United States was followed quickly by China arresting two Canadians.

Just last month, Chinese leader Xi Jinping was caught on camera scolding Canada’s Justin Trudeau over a sleight. 

What’s more, “it’s strange to have a Chinese presidency on North American soil,” said the high-level source — and early signs did nothing to dispel assumptions that China in charge would mean a weakening of ambition.

In the first week, China let Canada run the show shepherding talks on the key issues, from finance to the cornerstone target of protecting 30 percent of land and oceans by 2030.

But as the clock ticked down, it was China that took charge of the text, in an approach described as “gentle” diplomacy: having subject experts and political representatives work in a calm, even environment, according to another diplomatic source.

“China closed out the deal and cornered the developing countries with the $30 billion financing pledge by 2030,” said a third source, a European negotiator. 

When countries of the Global North sought more ambitious targets from the South, China responded by telling them they’d need to up their financing. And Beijing acted as a neutral arbiter, not aligning itself with the Group of 77 as it normally does.

“They’ve taken the risk of putting their own reputation on the line for something many thought they weren’t the natural leaders of,” said Lee White, a British-Gabonese conservationist and minister of water, forests and environment of Gabon. 

Nor is China a natural champion of environmental issues, having badly polluted its air and waters and degraded much of its land through agricultural production — a process it is trying to reverse through a greenification campaign. 

“Countries that destroy their biodiversity end up regretting it —  I think the Chinese probably got to that point and are now trying to put things right,” said White.

– High drama –

The passage of China’s compromise text wasn’t smooth sailing. 

A plenary session to ratify the text was postponed Sunday several times to accommodate last minute holdouts, though delegates were eventually asked to take their seats by around 9:00 pm, and wait. And wait, and wait, and wait. 

Some left the main hall to take naps, with several Western delegates expressing irritation that the session was not being adjourned until the next day.

It was around 3:00 am that the session finally began. A new text had been uploaded, and participants were once more buzzing at the prospect of a “peace pact for nature.” When delegates gathered in the vast plenary hall, drama struck.

A delegate from Democratic Republic of Congo refused to back the accord, demanding more funds.

The conference chair, China’s environment minister Huang Runqiu, brushed this off, declaring the deal “approved” and whacking down his gavel to loud applause. DRC’s ally Uganda branded it a “fraud” and a “coup,” but the accord passed.

An exultant Steven Guilbeault, Canada’s environment minister, downplayed the drama — insisting the process was upheld by the United Nations and disagreements on this scale were commonplace at such summits which he had been attending for 25 years.

“I’ve never seen a presidency text tabled and have so much support for it from the get-go,” with the vast majority of countries signing up right away, he enthused.

On cooperation with China, he told AFP: “We both decided to set aside our differences… to focus on what unites us,” adding: “What China and Canada have accomplished together in our relationship is symbolic of what we’ve accomplished here together, more than 196 countries.”

While China took center stage, the United States participated only in a supporting role.

President Joe Biden supports the pact’s goals and announced his own “30×30” plan domestically — but political opposition by Republicans prevents the US from signing on to the convention on biological diversity.

European equities rose Monday in light pre-Christmas trade, rebounding gently from last week’s losses that followed bumper interest rate hikes, but Wall Street and Asian markets failed to get into the holiday spirit.

Equity markets often experience a so-called Santa rally, when prices rise during thin year-end trading dominated by small investors in a festive mood.

“Everyone, it seems, is waiting to see if Santa is going to come around, which leaves the market stuck between feelings of hope and angst,” said market analyst Patrick O’Hare at Briefing.com.

Major indices in New York were in the red most of the day and finished firmly lower, with the S&P 500 off 0.9 percent.

Michael Hewson at CMC Markets said that most investors are likely “content to sit on the sidelines with the main focus likely to be on this week’s core PCE inflation data and personal spending numbers for November which are due on Friday.”

But in Europe, stocks moved timidly higher.

Both Frankfurt and London rose 0.4 percent, while Paris added 0.3 percent.

“Markets are grinding higher as some traders are optimistic about valuations which seem to them somewhat attractive,” AvaTrade analyst Naeem Aslam told AFP.

“We really don’t have much volume in markets as traders are away for holidays,” he added.

“Overall I think it’s going to be pretty subdued trading, given the lack of significant data to react to,” noted analyst Susannah Streeter at stockbroker Hargreaves Lansdown.

Asian indices fell on lingering concern over a possible global recession caused by moves to fight inflation from top central banks.

Equities took a turn south last week after monetary policymakers around the world signaled that while price rises appeared to be stabilizing, more work would be needed to get them under control.

Adding to the downbeat mood was a spike in Covid-19 cases in China following the country’s reopening after almost three years of strict containment measures.

While the move is expected to boost the world’s number two economy, there is a worry that businesses and China’s health system will be hit in the near term.

Still, Beijing flagged a number of measures aimed at kickstarting growth next year, including support for the beleaguered property sector.

An expected pick-up in Chinese demand helped propel oil prices higher, as did plans by the United States to refill its strategic oil reserves.

– Key figures around 2040 GMT –

New York – Dow: DOWN 0.5 percent at 32,757.54 (close)

New York – S&P 500: DOWN 0.9 percent at 3,817.66 (close)

New York – Nasdaq: DOWN 1.5 percent at 10,546.03 (close)

London – FTSE 100: UP 0.4 percent at 7,361.31 (close)

Frankfurt – DAX: UP 0.4 percent at 13,942.87 (close)

Paris – CAC 40: UP 0.3 percent at 6,473.29 (close)

EURO STOXX 50: UP 0.2 percent at 3,811.24 (close)

Tokyo – Nikkei 225: DOWN 1.1 percent at 27,237.64 (close)

Hong Kong – Hang Seng Index: DOWN 0.5 percent at 19,352.81 (close)

Shanghai – Composite: DOWN 1.9 percent at 3,107.11 (close)

Euro/dollar: UP at $1.0610 from $1.0586 on Friday

Pound/dollar: FLAT at $1.2148

Euro/pound: UP at 87.31 pence from 87.14 pence

Dollar/yen: UP at 136.95 yen from 136.60 yen

West Texas Intermediate: UP 1.2 percent at $75.19 per barrel

Brent North Sea crude: UP 1.0 percent at $79.80 per barrel

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