China ponders downgrading Covid status

Chinese authorities are considering downgrading Covid-19. This could be a positive for risk appetite on Wednesday in the financial markets that have been impacted on Tuesday by risk aversion.

Global stocks had their third straight day of losses on Tuesday as investors felt perplexed on how long the Fed will maintain hawkish stance on interest rates. China’s downgrading Covid-19 from the top class of infectious diseases could allow it to be managed more flexibly in a move that would relieve local governments of the legal obligations to introduce strong controls such as lockdowns.

Easing Covid restrictions in cities from Beijing to Hangzhou has brightened the outlook for Chinese stocks, and both onshore and offshore gauges may rise toward levels reached earlier this year when optimism over an end to lockdowns and an economic recovery drove gains.