Shanghai stocks close at 3-month high despite hawkish Fed, COVID worries

Shanghai stocks closed at three-month highs on Tuesday after tumbling in morning trade, despite an overnight slump in U.S. stocks on fears of aggressive U.S. interest rate hikes, as analysts expect China's growth to rebound with more policy support.

Shanghai stocks closed at three-month highs on Tuesday after tumbling in morning trade, despite an overnight slump in U.S. stocks on fears of aggressive U.S. interest rate hikes, as analysts expect China's growth to rebound with more policy support. The blue-chip CSI300 index rose 0.8% to 4,222.31, while the Shanghai Composite Index gained 1% to 3,288.91 points, after dropping as much as 1.8%.

** Wall Street hit a confirmed bear market milestone, which saw Goldman Sachs forecast a 75-basis-point interest rate hike at the Federal Reserve's policy meeting on Wednesday. ** "U.S. inflation has direct impact on A-shares, as we can see from the performance in recent two days," said Wang Mengying, a stock index futures analyst at Nanhua Futures. "China stocks performance will eventually depend on expectations of domestic economic recovery."

** "However, if more aggressive rate hikes led to less aggregate global demand, domestic expectations would also be hit." ** Authorities in China's capital Beijing are rushing to contain a COVID-19 outbreak traced to a 24-hour bar, with a health official saying the outbreak was "still developing".

** "I think the worst is actually behind us when it comes to the Omicron variant," said David Chao, global market strategist, Asia Pacific (ex-Japan) at Invesco. ** "While we see growth challenged in the first half of 2022, we expect a rebound in the second half driven by a combination of fiscal and monetary policy measures in contrast with many Western developed countries."

** Financials stocks jumped 2.7%, with banks adding 1.5%, while brokers soared 4.8%, and real estate developers gained 2%. ** Energy shares rose 2.3% and automobiles finished up 3.3%.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)