Chinese stocks gain after holiday; U.S. futures hold steady

China’s stock market rallied as it reopened after a week-long Lunar New Year pause, while futures for major US indices were near flat, offering few clues about the likely direction of markets. Americans in Monday’s trading session.

Global markets have been volatile in recent weeks as the Federal Reserve prepared to raise interest rates for the first time since 2018, and other major Western central banks have also become more hawkish. The prospect of a tightening of monetary policy prompted investors to turn to investments deemed safer.

By mid-afternoon in China on Monday, the CSI 300 index, which includes the largest stocks listed in Shanghai and Shenzhen, was up 1.6%, while the broader Shanghai Composite Index gained 2.1%.

E-mini futures tied to the technology-focused Nasdaq-100, S&P 500 and Dow Jones Industrial Average were little changed, gaining or losing around 0.1% or less.

The advances in onshore equities have been a “catch-up trade”, said Patrick Ru, a Hong Kong-based portfolio manager with Neuberger Berman Group’s global equities team. The S&P 500 gained 1.5% in volatile trading last week.

“Even if the index is strong, I would say there is probably some underlying volatility,” Ru added. Onshore shares of Chinese oil major PetroChina Co.

were a notable gain, adding nearly 8% by early afternoon.

The broad gains came even as a private gauge of China’s services sector slipped to its lowest level in five months, as Covid-19 outbreaks and tight restrictions disrupted consumer spending. The Caixin China Services Purchasing Managers Index fell to 51.4 in January from 53.1 in December.

Elsewhere in the region, the Japanese Nikkei 225 fell 0.7% and the Australian S&P/ASX 200 lost 0.1%. In Hong Kong, the city’s flagship index, Hang Seng, which gained on Friday after a three-day holiday, fell 0.4% by mid-afternoon, and the Hang Seng Tech index fell by 1.5%.

Shares of Chinese internet companies, many of which are listed in Hong Kong, suffered last year as Beijing reined in the sector with a barrage of new rules and a series of fines. Valuations for Hong Kong-listed stocks are now quite reasonable, Ru said, adding that he does not expect China’s internet sector to be hit by major regulatory changes this year.

In the bond market, the benchmark 10-year US Treasury yield fell to 1.903%, according to Tradeweb. On Friday, it had risen to 1.930%, the highest since December 2019. Yields and prices are moving in opposite directions.

Write to Dave Sebastian at [email protected]

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Garland K. Long