Asian markets up after China ends travel quarantine

China has abruptly reversed its strict pandemic restrictions even as a surge in infections overtakes the country.

The latest easing will see three years of border controls end on January 8 when Beijing downgrades Covid-19 to a Class B infectious disease.

People in China have since gone rushing to search for overseas flights, with the reopening set to be a boon for the travel industry.

China’s benchmark Shanghai index and the second index in Shenzhen both posted healthy gains, while Tokyo ended a shade higher with Seoul, Singapore and Mumbai all also up.

Markets in Hong Kong and Sydney were still closed for a holiday.

“Global equities climbed Tuesday while the dollar declined amid positive sentiment from China upping the speed limits on zero-Covid off ramps and the softening of a key inflation measure in the U.S.,” Stephen Innes of SPI Asset Management said.

“Inbound tourism is not a huge economic bounty for China relative to domestic tourism but policy fast-track and early zero-Covid exit means growth could recover enormously,” he added.

Markets have also been buoyed by fresh data last week that indicated a slowing of U.S. inflation, as well as an uptick in consumer spending, which saw Wall Street take gains into the Christmas break.

But the news was not definitive and all eyes will be on how the Federal Reserve raises interest rates to balance inflationary concerns alongside the possibility of a recession caused by increased borrowing costs.

Following a holiday for commodities traders on Monday, oil continued its surge after a senior official said Russia could cut up to 7% of its production next year.

Production was also curtailed by freezing conditions in the United States, where more than 1.8 million barrels a day of oil processing capacity in Texas was hit by the extreme weather, according to Bloomberg News.

Both Brent Crude and West Texas Intermediate jumped around 0.5% on the supply shortfalls and expectations of renewed demand from China.