Asian stocks rise on China reopening hopes, track Wall Street

Asian shares rose on Tuesday as US stocks increased overnight before midterm elections and investors clung on to hopes that China would eventually relax its strict pandemic curbs even after the government reaffirmed its commitment to the zero-Covid policy.

Wall Street ended sharply higher Monday as investors focused on Tuesday's midterm elections that will determine control of Congress, while shares of Meta Platforms jumped on a report of job cuts at the Facebook parent.

MSCI's gauge of Asia Pacific stocks outside Japan was up 0.39% at 0134GMT. Hong Kong's Hang Seng index and China's benchmark Index were up 0.3% and 0.14%, respectively.

"The thing to watch ... will be the US midterms today and the CPI data tomorrow," said Redmond Wong, Saxo Markets' market strategist for Greater China, in a note on Tuesday.

"Markets are expecting the gridlock situation of a divided Congress and moderation in the US CPI. Both are helping the risk-on sentiments."

Investors are hoping China will gradually ease its zero-Covid policy and reopen to the world, even after health officials reiterated their commitment to the policy on Saturday at a press conference.

The policy has weighed on China's economic activity, with downbeat trade data on Monday providing the latest sign that the world's second-largest economy is slowing.

"Investors took note (of the fact) that the health officials added that local governments should not unreasonably double down on the implementation and must ensure people's livelihood and economic activities remain normal," Wong added.

Australia's S&P/ASX 200 climbed 0.22%, lifted by financial companies. 

Japan's Nikkei 225 .N225 shot up 1.33% in early trade, hitting an 8-week high.

Overnight, the Dow Jones Industrial Average rose 1.31%, the S&P 500 gained 0.96% and the Nasdaq Composite advanced 0.85%.

Analysts said US mid-term elections on Tuesday could impact markets.

Control of the US House of Representatives is at stake in the midterms, with Republicans favoured by nonpartisan forecasters to win control.

"A divided government in Washington is ostensibly bullish for equities," said Stephen Innes, managing partner of SPI Asset Management in a note.

"Gridlock cross-checks each party's 'worst impulses,' and less activist fiscal policy is conducive to lower market volatility. That could be particularly helpful in 2022 and 2023 to the extent it calms rates volatility, the principal sponsor of this year's historic cross-asset malaise," he said.

Oil prices rebounded after losses on Monday with US crude CLc1 up 0.06% and Brent LCOc1 0.16%, respectively.

Spot gold remained flat at $1,673.9 an ounce as investors stuck to the sidelines ahead of key US inflation figures on Wednesday.

In currency markets, the dollar was kept on the back foot by strength in the Chinese yuan and other currencies sensitive to China's growth.