BANGKOK (AP) — Wall Street will reopen Tuesday with stocks down slightly after a holiday break. The S&P 500 fell 0.2% and the Dow Jones Industrial Average was flat just after the open, while the tech-heavy Nasdaq Composite Index fell 0.6%. Investors in Europe and Asia rallied stocks after news that air passengers arriving in China from abroad will no longer have to observe a quarantine, the latest step to remove once-stringent virus control measures in the number 2 economy in the world. Oil prices are rising. Southwest Airlines has the biggest drop in nearly three months after a wave of flight cancellations drew scrutiny from regulators.
THIS IS A LAST MINUTE UPDATE. Previous AP story appears below.
Global stocks rose on Tuesday after China announced it would ease more of their pandemic restrictions despite widespread outbreaks of COVID-19 that are straining their medical systems and stop business.
China’s National Health Commission said on Monday that passengers arriving from abroad will no longer have to observe a quarantine from January 8. They will still need a negative virus test within 48 hours of their departure and wear masks on their flights.
But it was the latest step to remove once-stringent virus control measures that have severely limited travel to and from the world’s No. 2 economy.
“With economic activity faltering and multinationals questioning the viability of China as a sourcing location, policymakers, as so often in the past, have taken a very businesslike approach,” Stephen Innes of SPI Asset Management said in a commentary.
Businesses welcomed the move as an important step towards the reactivation of business activity in crisis.
Germany’s DAX gained 0.7% to 14,032.67 and the CAC 40 in Paris rose 0.9% to 6,564.29. London markets were closed for holidays.
Oil prices also advanced.
Futures for the Dow Jones Industrial Average and S&P 500 rose 0.6%. On Friday, the S&P 500 closed 0.6% higher. It’s down 19.3% for the year, right on the cusp of a bear market. The Dow Jones Industrial Average rose 0.5%, while the tech-heavy Nasdaq rose 0.2%. The Russell 2000 Index rose 0.4%.
China has joined other countries in treating cases rather than trying to stamp out infections. It has removed or eased rules on testing, quarantine and movement, trying to reverse an economic downturn. But the change has flooded hospitals with feverish and wheezing patients, and authorities are going door-to-door, paying people over 60. to get vaccinated against COVID-19.
The Shanghai Composite Index jumped 1% to 3,096.57. Hong Kong markets were closed for holidays, as were those in Australia.
Tokyo’s Nikkei 225 added 0.2% to 26,447.87 and Seoul’s Kospi gained 0.7% to 2,332.79.
In Bangkok, the SET index rose 1% on anticipation that a loosening of controls on foreign travel for Chinese would boost the all-important tourism industry.
The US and European markets were closed on Monday for holidays.
Strong US consumer spending and a strong job market have kept the economy growing, but also raise the risk that the Federal Reserve will need to persist in raising interest rates and keeping them high to squash inflation.
After last week’s updates, the last big reports of the year, investors will be keeping an eye on corporate earnings which can provide insight into how the economy is faring.
The pace of price increases has slowed, but the Fed has said it will continue to raise interest rates to control inflation. Its key overnight rate is at its highest level in 15 years, after starting the year at a record low near zero. The key lending rate, the federal funds rate, is in a range of 4.25% to 4.5%, and Fed policymakers have forecast it to hit a range of 5% to 5.25%. by the end of 2023 and will not be reduced before 2024.
Higher rates carry the risk of the economy stagnating and falling into recession in 2023. They have also been weighing heavily on stock prices and other investments.
In other trading on Tuesday, benchmark US crude oil rose 50 cents to $80.06 a barrel in electronic trading on the New York Mercantile Exchange. It gained $2.07 to $79.56 before markets closed for the long holiday over the Christmas weekend.
Brent crude oil, the price basis for international trade, also added 53 cents to $85.03 a barrel.
In currency trading, the US dollar fell to 133.24 Japanese yen from 132.89 yen on Monday night. The euro rose to $1.0659 from $1.0638.
