Asian equities up on hopes of easing COVID restrictions

SINGAPORE Asian equities went up on Thursday, propped up by Hong Kong and China, amid growing optimism over easing COVID restrictions in the world's second biggest economy, even as fears of a slowdown and worries over Fed interest rate rises linger.

The broadest index of Asia-Pacific shares outside Japan was up 0.57 per cent, on track to snap a two-day losing streak.

China's stock market was 0.14 per cent higher, with Hong Kong's Hang Seng Index surging nearly 3 per cent after a pro-China newspaper reported that Hong Kong government is considering relaxing its COVID-19 curbs further.

The government has made changes to its anti- COVID policy after it has battered China's economy.

Wenli Zheng, portfolio manager of the China Evolution Equity Strategy at T. Rowe Price said that China is ready to move on from COVID over the next few weeks, but he said that China could be the bright spot in 2023, despite the fact that it could be a bumpy journey over the next few weeks.

As strong jobs and service sector reports crimped investors' risk appetite, the gains in Asia were capped by increasing fears that the Federal Reserve might stick to a longer rate-increase cycle.

Australia's S&P ASX 200 index lost 0.67 per cent in Asia, while Japan's Nikkei fell to near a one month low. E-mini futures for the S&P 500 fell 0.13 per cent, while Eurostoxx 50 futures fell 0.20 per cent, German DAX futures fell 0.18 per cent and FTSE futures fell 0.17 per cent.

The U.S. Treasury yields, with five-year notes to 30 year bonds hovering at three-month lows, were also weighing in.

Rob Carnell, head of ING's Asia-Pacific research, said that the move on the U.S. Treasury market does not seem to be a lot behind the moves, and I think that's what is driving the rest of the market.

The US central bank is expected to raise interest rates by 50 basis points next week after delivering four consecutive 75 bps hikes.

The Bank of Canada raised overnight interest rates by 50 basis points to 4.25 per cent, the highest level in almost 15 years, the highest level in almost 15 years, the Bank of Canada said on Wednesday.

The data showed that U.S. worker productivity rebounded at a slightly faster pace than initially thought in the third quarter, but the trend remained weak, keeping labour costs elevated.

The yield on 10 year Treasury notes went up 5.4 basis points to 3.462 per cent, while the yield on the 30 year Treasury bond was up 3.6 basis points to 3.450 per cent.

The two-year U.S. Treasury yield, which usually moves in line with interest rate expectations, was up 3.9 basis points at 4.295 per cent.

The U.S. dollar wobbled as a prospect of a recession loomed in the country. The euro was down by 0.1 per cent to $1.0495, while the sterling was last trading at $1.2178, down 0.17 per cent on the day.

After sank to their lowest level this year, oil prices went up on Thursday. U.S. crude rose by 0.9 per cent to $72.66 per barrel and Brent was at $77.79, up 0.8 per cent on the day.