China stocks continued their monthlong rally early Monday as the country dropped some of its Covid restrictions over the weekend. Markets read the move as another sign that leadership may be backing away from the zero-Covid policy which kept the country's economy in check for the last three years.
Over the weekend, China health authorities began to ease testing requirements across major cities. The Wall Street Journal reported Sunday that officials in Beijing and other major cities announced they were lifting some restrictions, including ending mandatory Covid testing for people to use public transportation, enter parks and other public areas. China stocks responded favorably Monday.
The loosening of restrictions comes just days after anti-Covid policy protests erupted throughout the country. Some videos of protesters even showed people calling for President Xi Jinping to step down. President Xi told European Council President Charles Michel on Friday that the protesters were "mainly students" who were frustrated after three years of strict pandemic restrictions.
China stocks broadly made gains Monday during pre-trade activity. Meanwhile, U.S. crude oil also advanced about 2.6% to around $82 per barrel early, lifted at least partly on optimism that the Chinese government's decision to begin relaxing Covid policy could lead to increased demand. China is the globe's top crude importer.
U.S. crude oil fell 3.3% to $77.35 per barrel later in the day.
China Stocks Keep Rally Going
The Hong Kong Hang Seng Index shot up 4.5% on Monday. The benchmark has rebounded around 33% since Oct. 31, but remains down 16% for the year. Meanwhile, the Shanghai Composite popped 1.8% Monday. The gauge of China's top mainland market has clawed back 11% over the last month, but is down 11.8% so far in 2022.
The S&P 500 has rebounded nearly 14% from an Oct. 12 low and is up more than 5% since Oct. 31.
On the Nasdaq 100 Monday, China stocks led the index in premarket trade. During market trade, Pinduoduo advanced 1.7% and Baidu jumped 2.7%. Trip.com gained 1.4% and JD.com edged up 0.9%.
China stock Alibaba, an Amazon.com competitor, rose 0.3% Monday.
China ETFs also scored gains early Monday. The iShares MSCI China angled up 2% before dropping at the close. The Xtrackers Harvest CSI 300 China A-Shares gained 0.6%.
Along with China stocks, U.S. based casino stocks on the S&P 500 extended their rally Monday. The group has jumped last week's, on news the Chinese government granted provisional license extensions to operate in Macau. Wynn Resorts shot up 0.7% Monday. Las Vegas Sands rallied 2.4% early before falling 0.5% at the close. MGM Resorts International, which has less exposure to Macau than its competitors, added 1.9% Monday.
Fellow casino stock Melco Resorts & Entertainment jumped 5.9%.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
