Asian markets mostly rise as investors watch for signs of China relaxing COVID restrictions

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TOKYO — Asian stocks advanced Monday as investors weighed uncertainties such as the U.S. mid-term elections and China’s possible moves to ease coronavirus restrictions.

China reported its trade shrank in October as global demand weakened and anti-virus controls weighed on domestic consumer spending. Exports declined 0.3% from a year earlier, down from September’s 5.7% growth, the customs agency reported Monday. Imports fell 0.7%, compared with the previous month’s 0.3% expansion.

Speculation about a possible relaxation of China’s zero-COVID strategy has had a huge impact on markets. On Monday, Hong Kong’s Hang Seng Index
HK:HSI
gained 3.4% and the Shanghai Composite Index
CN:SHCOMP
climbed 0.5%.

But there has been no official confirmation of a major change.

“Over the weekend, Beijing has dashed hopes of China re-opening in the horizon, by re-asserting of zero-COVID policies. And this could induce fresh caution,” said Tan Boon Heng at Mizuho Bank in Singapore.

Japan’s benchmark Nikkei 225
JP:NIK
jumped 1.3% in morning trading. Australia’s S&P/ASX 200
AU:XJO
gained 0.4% and South Korea’s Kospi
KR:180721
gained 1%. Shares also rose in Taiwan
TW:Y9999,
Singapore
SG:STI
and Indonesia
ID:JAKIDX.

In the U.S., Tuesday’s election will decide control of Congress and key governorships. History suggests the party in power may suffer significant losses in the midterms, and decades-high inflation has become a significant issue for the Democrats.

Analysts say regional markets may take a wait-and-see approach ahead of the U.S. mid-term vote.

Wall Street stocks ended last week with a rally but only after yo-yoing several times. Market watchers had data on the U.S. jobs market to digest, considering what it might mean for interest rates and the odds of a recession.

The S&P 500
SPX
recorded its first loss in the past three weeks, despite Friday’s gain 1.4% to 3,770.55. The Dow
DJIA
rose 1.3% to 32,403.22, and the Nasdaq
COMP
climbed 1.3% to 10,475.25. Both also finished with losses for the week.

The unemployment rate ticked higher in October, employers added fewer jobs than they had a month earlier and gains for workers’ wages slowed a touch. The slowdown was still more modest than economists expected. And so the Fed is expected to keep hiking rates.

Fed Chair Jerome Powell has called out a still-hot jobs market as one of the reasons the central bank may ultimately have to raise rates higher than earlier thought. Such moves could cause a recession.

The yield on the two-year Treasury fell to 4.68% from 4.72% late Thursday. The 10-year yield, which helps dictate rates for mortgages and other loans, edged higher to 4.16% from 4.15%.

In energy trading, benchmark U.S. crude
CLZ22
fell $1.29 to $91.32 a barrel. Brent crude
BRNF23,
the international standard, lost $1.13 to $97.44 a barrel.

In currency trading, the U.S. dollar
USDJPY
edged up to 147.22 Japanese yen from 146.65 yen.

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