World shares rise as investors hope for China's zero-Covid policy easing

World shares were higher on Friday, led by gains in Chinese markets as investors grasped at hopes for an easing of the country's stringent pandemic controls.

Hong Kong's benchmark soared more than 7 per cent but then fell back, gaining 5.4 per cent after a Communist Party newspaper, the Global Times, reported that local officials were being told not to impose overly burdensome restrictions to curb coronavirus infections.

The Shanghai Composite index also jumped, gaining 2.4 per cent as sentiment was buoyed by an article in the party newspaper People's Daily by China's former top trade envoy, Liu He, who said the country would continue its market reforms.

He appeared to be seeking to allay concerns after Liu and some other prominent reformers were dropped from the top ranks of leadership at a party congress last month.

European benchmarks were also higher in early trading. France's CAC 40 added 0.9 per cent to 6,299.09. Germany's DAX rose 07 per cent to 13,216.27.

Britain's FTSE 100 gained 0.8 per cent to 7,247.39. The future for the Dow industrials was 0.3 per cent higher while the future for the S&P 500 added 0.4per cent.

Hong Kong's market has gyrated in the past few days as investors speculated over signs that Beijing might ease strict zero-COVID" policies that have led to entire cities being kept in lockdown for weeks.

The rules also require frequent mass testing and lengthy quarantines for travellers.

The Global Times and other media reported that the Chinese National Health Commission had advised local governments to try to curb outbreaks using the minimum scale affected, and the shortest time and lowest cost possible."

It said that was in a bid to correct mistakes from overly strict measures that have caused damage to people's properties and lives."

However, it also said that China was unswervingly adhering to the dynamic zero-COVID strategy by preventing the import of cases and internal rebounds."

This week has brought a flurry of speculation over the possibility that Beijing might alter course nearly three years into the pandemic.

Investors are watching for signs of recovering demand in China, the world's second-largest economy, and an end to disruptions to manufacturing and transport that have affected global supply chains.

There has been no official confirmation of broad policy changes.

Rumors continue to circulate around China's plans to relax certain COVID restrictions in the first major move away from its zero-COVID policy.

Of course, this is pure speculation at the moment," Craig Erlam, a senior market analyst at Oanda, said in a report.

The gains in Hong Kong's Hang Seng index left it up almost 9 per cent for the week, at 16,161.14. It's still down 36per cent in the past year, sapped by China-US tensions, coronavirus woes and a Chinese crackdown on technology companies. The Shanghai Composite added 80 points to 3,070.80.

Elsewhere in Asia, Tokyo's benchmark Nikkei 225 dropped 1.7 per cent to 27,199.74, catching up after Japan's markets were closed Thursday for a holiday.

Australia's S and P/ASX 200 added 0.5 per cent to 6,892.50, and South Korea's Kospi gained 0.8 per cent to 2,348.43.

On Thursday, Wall Street's benchmark S and P 500 lost 1.1 per cent and the tech-heavy Nasdaq composite index sank 1.7 per cent.

The Dow lost 0.5 per cent and the Russell 2000 also fell 0.5 per cent.

The declines followed a sixth increase by the Federal Reserve of its benchmark rate this year. The three-quarters-of-a-percentage-point raise took short-term interest rates to a range of 3.75 per cent to 4 per cent, the highest level in 15 years.

Wall Street is evenly split on whether the central bank ultimately will raise rates to a range of 5 per cent to 5.25 per cent or 5.25 per cent to 5.50 per cent next year.

Investors had been hoping for economic data signalling that the Fed might avoid more rate hikes that might go too far in slowing the economy and bring on a recession.

But hotter-than-expected data from the employment sector suggests the Fed will remain aggressive.

On Friday, Wall Street will get a broader update from the US government's October jobs report.

An update on consumer inflation is due out next week.

A busy week ahead for economic releases is expected with the key focus on US and China inflation figures for October.

China will also update October trade figures. The United Kingdom meanwhile releases third quarter GDP figures while Germany's industrial production data will also be due, S and P Global Market Intelligence said in its report on the upcoming week.

In energy trading, benchmark US crude rose USD 2.19 to USD 90.36 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, gained USD 2.07 to USD 96.74 a barrel.

In currency trading, the US dollar inched down to 147.64 Japanese yen from 148.25 yen. The euro cost 97.83 cents, up from 97.50 cents.