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HARRISON MILLER

China Pivots Covid Policy; China Stocks, Oil Prices Rally

China-based stocks listed on U.S. exchanges leapt early Friday after Beijing relaxed a number of its "Zero Covid" policy restrictions. The changes included reduced airport quarantine times for inbound visitors, scrapped airline penalties for bringing Covid-positive passengers and reductions in mass testing, Bloomberg reported.

On U.S. markets, the KraneShares CSI China Internet Fund, an ETF composed of more than 40 China-based tech stocks, spiked nearly 9% prior to Friday's market open. Electric vehicle makers Nio soared 13% and Li Auto jumped 8%.

Travel booking site Travel.com bolted 8% higher.

Meanwhile, Alibaba Group stock rose 8% on the news. Alibaba may also have received a boost from its Singles Day sales event on Friday, which is the company's equivalent to Amazon's Prime Day. Internet retailers JD.com spiked and Pinduoduo spiked nearly 8% and more than 5%, respectively.

U.S. based stocks with heavy exposure to China's markets also rallied.

In Hong Kong, the benchmark Hang Seng Index rallied nearly 8% on Friday. On the mainland markets, The Shanghai Composite clocked out with a 1.7% gain.

Some major Chinese cities remain in partial or total Covid lockdowns the country's number of daily infections on Friday surpassed, 10,000 for the first time since April. The Guangzhou manufacturing hub locked down its 5 million residents on Wednesday, in an effort to prevent more extensive shutdowns, the type seen in Shanghai earlier this year.

China Stock Boost Lifts U.S. Market

Global oil price gains accelerated Thursday on news of China's covid policy pivot. Oil surged Wednesday, as the dollar tumbled following weak October inflation data. On Thursday, U.S. oil futures rose more than 4% on the China news, which pointed to a possible increase in global energy demand. West Texas Intermediate futures topped $90 per barrel.

Both Dow Jones and S&P 500 futures also edged higher early Friday, pointing to further gains following Thursday's strong stock market advance.

You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison

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