Hong Kong stocks lead gains in mixed Asia session; China's Covid situation remains in focus - CNBC

Stocks in Hong Kong closed at session highs as Chinese health authorities reported recent uptick in senior vaccination rates, which is regarded by experts as crucial to reopening the economy that has been facing sporadic lockdowns.

The CSI 300 index, which tracks the largest mainland-listed stocks, climbed 3.09% to 3,848.42 as the nation's Covid cases on Monday were lower than Sunday's count, the first decline since Nov.

The moves come after a negative start to the week were investors reacted to the unrest over China's Covid restrictions.

U.S.-listed shares of Chinese technology companies rose in pre-market trade after Chinese health authorities reported a recent uptick in senior vaccination rates.

Hong-Kong listed tech companies also surged after the press briefing by health authorities — the wider Hang Seng Tech index ended its session more than 7.6% higher.

Chinese health authorities urged its elderly population to show initiative regarding vaccination.

Chinese health authorities said that officials are "closely watching" the developments of Covid when asked if protests in the region would lead to shifts in its zero-Covid policy.

"China has been following and closely watching the virus as it evolves and mutates," officials said, according to a translation of Tuesday's briefing.

The measures seek to "ensure that banks maintain adequate capital and liquidity for such exposures," he said.

China's health authorities released a plan to boost elderly vaccination, according to a notice on the National Health Commission's website.

The notice said authorities should use multiple data points to accurately identify target groups for vaccination for the elderly.

China's state council is expected to deliver a positive message at the upcoming Covid press conference, but the announcement will not include a "milestone," said Pinpoint Asset Management's President Zhiwei Zhang.

"I think the message would be positive actually … there are quite many positive signals coming from the central and local governments," said Zhang, who cited examples such as the government allowing residential compounds in Beijing to be opened.

Both the onshore and offshore Chinese yuan strengthened against the dollar in Asia's session ahead of a press conference on Covid measures.

Local media reported that the Chinese State Council will hold a press conference on Covid measures at 3 p.m.

Chinese President Xi Jinping has been realistic and practical on Covid, domestic real estate issues and politics since the end of the Communist Party of China's National Congress, said Andy Rothman, an investment strategist at Matthews Asia.

"He's been pragmatic on Covid policy, announcing a change in direction more towards living with Covid rather than Covid zero," he said on CNBC's "Squawk Box Asia" when asked about how the government might respond to recent unrest in parts of China.

Even with daily Covid cases continuing to climb, cities like Shanghai have not shown a slowdown in road traffic activity, according to Rystad Energy's own research.

The Chinese government is unlikely to make sudden changes to its zero-Covid policy as that will bring chaos, National University of Singapore Professor Wang Gungwu said on CNBC's "Squawk Box Asia.".

"If you change the policy suddenly, I think the damage and the consequences would be even worse — it'd be really chaotic because I think the spread of Covid will be absolutely unprecedented," said Wang.

The index rose more than 3% as of Tuesday morning, and is up around 22% for the month of November, according to Refinitiv data.

Louis Fed President James Bullard said Monday that the Fed should continue to raise its benchmark interest rate in the coming months and that the market may be underestimating the chance that the Fed has to get more aggressive.

"We're going to have to continue pursue our interest rate increases into 2023, and there's some risk that we've have to go even higher than [5%]," Bullard said at a Barron's Live webinar.

But they probably won't come down quite as fast as markets would like and probably the Fed would like," Bullard said.