By Tom Westbrook



a group of people walking down the street: FILE PHOTO: Passersby wearing protective face masks walk past a screen displaying Nikkei share average and world stock indexes, amid the coronavirus disease (COVID-19) outbreak, in Tokyo


© Reuters/ISSEI KATO
FILE PHOTO: Passersby wearing protective face masks walk past a screen displaying Nikkei share average and world stock indexes, amid the coronavirus disease (COVID-19) outbreak, in Tokyo

SINGAPORE (Reuters) – Chinese stocks led Asian markets higher on Monday as investors bet on a steady recovery for the world’s no. 2 economy, though caution about the fate of U.S. stimulus kept the dollar firm and a central bank policy tweak unwound some of the yuan’s gains.

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MSCI’s broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> rose 0.8% to 2-1/2-year highs, buoyed by a 2% gain in Chinese blue chips <.csi300> and a 1.5% rise by Hong Kong’s Hang Seng index <.hsi>. Japan’s Nikkei <.n225> slipped 0.3% as investors fretted about corporate earnings. [.T]

“If capital is moving on relative growth rates, then China is looking quite attractive,” said Chris Weston, head of research brokerage Pepperstone in Melbourne. Equities are cheap, yields advantageous and the outlook solid, he said.

“From a virus perspective as well, we’re seeing concerns in Europe, while China is considered a quasi-safe haven.”

China has returned from an eight day Mid-Autumn festival with investors encouraged by a robust rebound in tourism and ebbing coronavirus cases.

Qingdao city said on Monday it will conduct COVID-19 tests for the entire population of more than 9 million people over five days after small number of new cases.

Elsewhere, in the U.S. midwest, infections are at record levels and the World Health Organization is urging fresh curbs for Europe.

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Coronavirus aid plans in the United States are also in disarray, with the Trump administration on Sunday calling on Congress to pass a stripped-down