# Stocks advance, U.S. dollar retreats as China drops quarantine rule
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-12-27
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: China lifts quarantine rules, driving stock market gains
Meta Description: China announces end to quarantine rule for travellers, boosting market confidence. Stock markets on the rise, dollar falls. Find out more with Reuters.
URL: https://financedigest.com/stocks-advance-u-s-dollar-retreats-as-china-drops-quarantine-rulehtml

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By Xie Yu

HONG KONG (Reuters) – Stock markets gained while the U.S. [dollar softened on Tuesday after China said it would drop](https://www.financedigest.com/dollar-drops-as-inflation-cools-more-than-expected.html "Dollar drops as inflation cools more than expected") its quarantine requirements for inbound visitors, further easing three-year border controls aimed at curbing COVID-19.

[China will stop requiring inbound travellers to go into quarantine](https://www.financedigest.com/wall-st-stocks-fall-bond-yields-rise-as-china-drops-quarantine-rule.html "Wall St stocks fall, bond yields rise as China drops quarantine rule") starting from Jan. 8, the National Health Commission said on Monday. It will also downgrade the seriousness of COVID-19 as it has become less virulent and will gradually evolve into a common respiratory infection.

By Tuesday early afternoon in [Hong Kong](https://www.financedigest.com/hong-kong-finance-official-to-make-first-visit-to-britain-in-three-years.html "Hong Kong finance official to make first visit to Britain in three years"), MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5%. China’s bluechip added 1.1%.

Japan’s Nikkei share average was up 0.3% by lunchtime, having given up some early gains that had taken the index to its highest in a week, helped by retailers’ hopes for a return of big-spending Chinese tourists, as Takashimaya [boosted its profit outlook](https://www.financedigest.com/recruiter-hays-boosted-by-record-net-fees-but-cautious-on-outlook.html "Recruiter Hays boosted by record net fees, but cautious on outlook").

U.S. stock futures, the S&P 500 e-minis, inched up 0.6%, [indicating the market](https://www.financedigest.com/market-stress-indicators-react-sharply-after-u-s-bank-failures.html "Market stress indicators react sharply after U.S. bank failures") is set to rise as traders return to their terminals on Tuesday after the Christmas holiday.

Markets in some regions including [Hong Kong](https://www.financedigest.com/citadel-accelerates-hiring-push-in-hong-kong-and-london.html "Citadel accelerates hiring push in Hong Kong and London") and Australia remain shut on Tuesday.

Chaoping Zhu, a global market strategist and JPMorgan Asset Management, said the latest [policy move from China](https://www.financedigest.com/dutch-responds-to-us-china-policy-with-a-plan-to-curb-semiconductor-tech-exports.html "Dutch responds to US China policy with a plan to curb semiconductor tech exports") indicated economic activity in most major cities may return to normal very quickly, which is very positive for investors.

Most Chinese cities could recover from the first wave of the latest [COVID-19 outbreak](https://www.financedigest.com/australia-steps-up-vaccine-push-to-stem-covid-19-outbreak.html "Australia steps up vaccine push to stem COVID-19 outbreak") by January… this would be faster than people have expected,” he said, adding there was concern of an outbreak [lasting longer](https://www.financedigest.com/brand-loyal-brits-have-longer-relationships-with-their-car-than-their-last-lover.html "BRAND-LOYAL-BRITS HAVE LONGER RELATIONSHIPS WITH THEIR CAR THAN THEIR LAST LOVER") and weighing on the economy, but that developments generally have been better than expected.

He also said the reopening of China, which also entails resuming outbound visits for Chinese tourists, will [lift consumer and service sectors](https://www.financedigest.com/sterling-rises-as-receding-bank-sector-worries-lift-sentiment.html "Sterling rises as receding bank sector worries lift sentiment") outside of the country, particularly those in nearby Southeast Asia.

Inbound tourists had recovered 60% to 70% by November for many ASEAN countries, Zhu said, citing in-house research, but there is still a gap between now and 2019 before the pandemic.

This [gap will be filled](https://www.financedigest.com/uk-firms-plan-biggest-pay-rises-since-2012-to-fill-staff-gaps.html "UK firms plan biggest pay rises since 2012 to fill staff gaps") by Chinese tourists. This is the last piece of the puzzle,” he said.

As a result the dollar moved broadly lower on Tuesday, as currencies from most emerging Asian countries strengthened, as [risk appetite](https://www.financedigest.com/stocks-rise-after-bank-sale-fuels-investor-risk-appetite.html "Stocks rise after bank sale fuels investor risk appetite") grew after China scrapped its quarantine rule.

The South Korean won gained the most, rising about 0.7% to [hit its highest since June](https://www.financedigest.com/uk-mortgage-approvals-hit-lowest-since-june-2020.html "UK mortgage approvals hit lowest since June 2020") 10.

Currencies in New [Zealand and Australia](https://www.financedigest.com/organic-expansion-to-run-through-the-australia-new-zealand-herbal-supplements-market.html "Organic Expansion To Run Through The Australia New Zealand Herbal Supplements Market") also moved higher.

The kiwi added 0.3% to $0.6288 while the Aussie gained 0.1% to $0.67395 in mostly thin year-end trading. The two currencies are often used as liquid proxies for [China’s yuan](https://www.financedigest.com/dollar-slips-yuan-gains-on-china-pmi-hot-inflation-lifts-euro.html "Dollar slips, yuan gains on China PMI; hot inflation lifts euro").

[Oil prices ticked](https://www.financedigest.com/oil-ticks-up-as-u-s-inflation-cools-but-prices-set-for-monthly-drop.html "Oil ticks up as U.S. inflation cools, but prices set for monthly drop") up on thin trade on Tuesday, on concerns that winter storms across the United States were affecting logistics and production of petroleum products and shale oil.

Brent crude was up 0.6%, at $84.42 a barrel, while U.S. West Texas Intermediate crude was at $80.04 a barrel, up 0.6%.

U.S. [Treasuries will resume](https://www.financedigest.com/wall-st-flutters-treasury-yields-ease-as-powell-resumes-testimony.html "Wall St flutters, Treasury yields ease as Powell resumes testimony") trading on Friday. The benchmark 10-year yield climbed the most last week [since early](https://www.financedigest.com/first-quarter-dash-for-cash-largest-since-early-2020-bofa.html "First quarter ‘dash for cash’ largest since early 2020 -BofA") April, ending around 3.75%.

The latest Personal Consumption Expenditures (PCE) price index, [released on Friday showed inflationary pressure](https://www.financedigest.com/oil-prices-dip-on-u-s-crude-reserve-release-inflation-pressure.html "Oil prices dip on U.S. crude reserve release, inflation pressure") is easing, but Federal Reserve policymakers remain concerned by the strength of the labour market and the stickiness of service sector and wage inflation, which could complicate the central bank’s efforts.

Analysts from Citi flagged upside risk in a report on Friday that the [Fed’s policy interest rate](https://www.financedigest.com/fed-rates-up-boe-up-ecb-up-stocks-up.html "Fed rates up, BoE up, ECB up, stocks up") could reach 5.25% to 5.50% by the end of 2023, largely based on expectations of the labour market continuing to add jobs in the first months of 2023 despite already being very tight, putting further upward pressure on wages and non-shelter service prices.

(Reporting by Xie Yu; Additional reporting by Ankur Banerjee; Editing by Simon Cameron-Moore)


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