Global Stocks Rally Eyeing China Reopening

Global stock markets rallied Tuesday on hopes that China will ease its weeks-long Covid lockdown and gradually reopen businesses.

European exchanges closed higher and Wall Street's main indices also rose, spurred as well by a nearly one-percent rise in April retail sales.

"We've seen a much more positive vibe around European equity markets today, with reports out of Asia suggesting that China might be close to looking to ease some of its Covid restrictions, as case rates come down," Michael Hewson, chief market analyst at CMC Markets UK, said.

Much of Shanghai, China's economic hub and a city of 25 million, has been under lockdown since April as Beijing attempts to stamp out an Omicron-fueled virus surge under its strict zero-Covid policy.

The impact of Beijing's zero-Covid strategy on the world's second-largest economy was revealed Monday when official data showed that retail sales and industrial production in April on-year had slumped to their lowest levels in more than two years.

World markets have also been roiled by surging inflation, spiraling oil and wheat prices and Russia's war in Ukraine -- leaving investors jittery.

Wheat prices hit a record high in the European market Tuesday at 434.25 euros, after the world's second producer India announced an export ban due to falling output caused by climate change.

Oil prices also trended higher early on but fell back after Washington eased some sanctions on Venezuela in an effort to encourage political dialogue between President Nicolas Maduro's regime and its opponents.

One action permits US oil firm Chevron to negotiate with the state oil company PDVSA on the terms of any future activities in Venezuela, a US official said.

The US official stressed that the easing of sanctions would not permit Chevron to actually reach an agreement with PDVSA or undertake work inside or on behalf of Venezuela, where the oil sector has been hampered by international sanctions.

The British pound was the best-performing G10 currency on Tuesday, as traders bet that soaring UK inflation -- lifted in part by wage rises -- will see more monetary policy tightening by the Bank of England.

There are rising concerns that ongoing rapid interest rate rises by the BoE and other central banks including the Federal Reserve to curb decades-high inflation will push the economy into a downturn.

On the corporate front Tuesday, India's insurance giant LIC slumped on its market debut following the country's biggest-ever initial public offering, closing nearly eight percent below the IPO price.

Prime Minister Narendra Modi's government raised $2.7 billion by selling 3.5 percent of Life Insurance Corporation of India. But it was forced to cut back the offer from a planned five percent after markets turned volatile.

Walmart plunged 11.4 percent after reporting a 25 percent drop in quarterly profits to $2.1 billion due to higher costs for labor, food and fuel. Profits missed analyst expectations as the giant retailer lowered its annual earnings forecast.