Most Asian markets rose Monday after a surge on Wall Street fuelled by hopes the Federal Reserve could begin to slow its pace of interest rate hikes.
However, the bright start to the week was overshadowed by a plunge in Hong Kong and Shanghai after Xi Jinping was handed a third term as leader and put in place a team who back his economically damaging zero-Covid strategy.
The yen fluctuated against the dollar as speculation swirled that Japanese authorities had stepped into forex markets again to support their currency for a second time in as many sessions.
Tokyo, Sydney, Seoul and Taipei led gains after a strong performance in New York that was sparked by a report the Fed could begin to take its foot off the pedal in its rate hike campaign.
The Wall Street Journal article said some officials were keen to discuss a slowdown when they meet next month.
Markets have been hammered this year by fears that moves by the Fed and other central banks to fight decades-high inflation will spark a recession.
Officials had been expected to lift rates 75 basis points for a fourth successive time next month, while bets were increasing on another such move in December.
"The mere suggestion of the Fed stepping down from 75 basis points to a 50 basis point incremental rate hike in December produced a fierce rally in US equities, partial reversal of the recent surge in US Treasury yields and
smart about-turn in the US dollar," said National Australia Bank's Ray Attrill.
However, while most equity markets across the region were well up, Chinese markets were being hammered by the reshuffle at the top of government. Hong Kong shed more than four percent and Shanghai almost one percent.
-Zero-Covid worries-
Xi, who was at the weekend given a third five-year term as leader, handed key positions to loyalists who back his strategy of fighting Covid outbreaks with lockdowns and other strict measures.
The policy has been blamed for the sharp drop in growth in the world's number two economy, and while data showed Monday that it expanded more than forecast in the third quarter, traders remain on edge.
