Hong Kong leads global equities rally on hopes of Shanghai lift

On Tuesday, Hong Kong led a rally across stock markets on hopes that the economic hub of Shanghai will be able to relax its weeks-long lock-down and reopen businesses.

European exchanges were all strongly higher in afternoon trading and Wall Street's main indices snapped higher at the open.

OANDA analyst Jeffrey Halley said that the hopes that the Shanghai lockdowns will be lessened, along with the ensuing supply chain disruptions, have been enough to lift equities.

Much of the city of 25 million has been under lockdown since April due to Beijing's attempts to stamp out an Omicron-fuelled virus surge under its strict zero-Covid policy.

Tuesday's rally is the third day in a row that Shanghai has recorded no Covid 19 cases outside of its quarantine facilities.

The impact of the zero-Covid strategy on the world's second largest economy was revealed Monday when official data showed retail sales and industrial production in April had slumped to their lowest levels in more than two years.

World markets have been roiled by surging inflation, surging oil and wheat prices and Russia's war in Ukraine - leaving investors jittery.

After the second producer India announced an export ban on wheat, the European market price hit a record high of 434.25euro, the world's second producer announced an export ban due to falling output caused by climate change.

Oil was another area of concern.

Since March, oil prices have hit their highest levels as Europe continues to work towards a Russian embargo and China looks to relax Covid restrictions, said Craig Erlam, another market analyst at Oanda.

Demand fell briefly when China went into a lock-in, but now with Shanghai emerging from lockdowns and other cities likely to follow suit, demand should remain elevated, he said.

He added that it is difficult to see how prices can go down unless the OPEC and its allies ramp up production and fast.

On Tuesday, the British pound rallied more than one percent versus the dollar as traders bet that soaring UK inflation, lifted in part by wage rises, will see more monetary policy tightening by the Bank of England.

There are rising concerns that the BoE and other central banks, including the Federal Reserve, will increase their rates to curb decades-high inflation, which will cause the economy to go into a downturn.

On Tuesday, India's insurance giant LIC slid on its market debut after the country's biggest initial public offering, closing nearly eight percent below the IPO price.

Prime Minister Narendra Modi has raised $2.7 billion by selling 3.5 percent of the Life Insurance Corporation of India as his administration tries to sell off state assets to help tattered public finances.

After Russia invaded Ukraine and China's Covid lockdowns, it was forced to cut back the offer from a planned five percent stake in the market.

Elon Musk said that his planned purchase of Twitter would not go ahead unless he was assured that fewer than five percent of accounts on the platform were fake.

The owner of Tesla has bid $44 billion for the social media platform.

Brent crude for the North Sea was UP 0.2 percent at $114.50 per barrel.

West Texas Intermediate: UP 0.2 percent at 114.47 per barrel.

The euro dollar is up at $1.0532 from $1.0436 at 2030 GMT Monday.