Volkswacht Bodensee - Hong Kong reopens to lead Asian rally

Hong Kong led the way again, hitting an 11-month high, helped by hopes that China's reopening will fuel a strong recovery this year, while Bloomberg News said travel and box office numbers for the holidays were encouraging.

But uneven earnings from tech giants largely kept sentiment in check and saw Wall Street end on a soft note, with the Nasdaq in the red.

Traders are now awaiting the release of US growth data on Thursday and the Federal Reserve's preferred gauge of inflation Friday.

Still, Asia continued to outperform after a strong start to the year.

Next week, the Federal Reserve will make its latest policy decision since slowing its pace of rate hikes in December, after four straight 75 basis-point increases.

Speculation has been building in recent weeks that the bank could take its foot off the pedal as data points to inflation coming down quicker than expected and other indicators suggest last year's tightening was taking hold in the economy.

And while there remains some concern that the world's top economy could tip into recession, there is growing hope it can achieve a so-called soft landing.

Hong Kong jumped two percent Thursday -- to its highest level since early March -- while Singapore, Wellington and Jakarta were also up.

Seoul gained more than one percent as data showed South Korea's economy shrank in October-December -- for the first time since the second quarter of 2020 -- giving the central bank room to tone down its pace of rate hikes.

London opened on the front foot along with Paris and Frankfurt. But Tokyo, Manila and Bangkok fell.

Shanghai, Sydney and Taipei were closed for the holiday.

SPI Asset Management's Stephen Innes was upbeat about the outlook for equities.

"Once we chop through the cudgel of earnings reports, one can reasonably expect the buyback tailwind to resume in force come February," he said in a commentary.

"The opportunity set in non-US markets continues to look more attractive. And while China remains the faster horse in the race, still after a run of resilient activity data, lower gas prices, easier financial conditions and earlier China reopening, investors should take note of the solid non-recessionary vibes emanating from Europe."

And Ricky Tang at Value Partners Group added: "On the economic front, the Chinese government has emphasised that the top priority for 2023 is to boost economic growth, so it is possible for the government to introduce more policies to support the economy in the coming months."

He added that when Covid cases begin to subside "economic activities should gradually return to normal, paving the way to a stronger economic recovery".

Oil prices rose and have consolidated around their November highs on China demand expectations, with officials saying the number of daily Covid deaths had fallen nearly 80 percent since the start of the month.

The figures will come as some relief to investors who feared that a wave of infections across the country would offset the benefits of dispatching the zero-Covid strategy that hammered the economy for three years.

- Key figures around 0820 GMT -

Tokyo - Nikkei 225: DOWN 0.1 percent at 27,362.75 (close)

Hong Kong - Hang Seng Index: UP 2.4 percent at 22,566.78 (close)

London - FTSE 100: UP 0.5 percent at 7,780.26

Shanghai - Composite: Closed for holiday

Euro/dollar: DOWN at $1.0917 from $1.0921 on Wednesday

Pound/dollar: DOWN at $1.2400 from $1.2403

Euro/pound: DOWN at 88.01 pence from 88.02 pence

Dollar/yen: UP at 129.68 yen from 129.57 yen

West Texas Intermediate: UP 0.5 percent at $80.52 per barrel

Brent North Sea crude: UP 0.3 percent at $86.37 per barrel

New York - Dow: FLAT at 33,743.84 (close)

L.Janezki--BTB