ASX futures were down 0.7pc ahead of the rest of the shortened trading week.

Stocks in the United States mostly fell on Tuesday, as traders returned from a long holiday weekend and grappled with the implications of China’s decision to relax its Covid-19 protocols on the global economy as central banks grapple with inflation.

The S&P 500 was down 0.4%, the Nasdaq Composite dropped 1.4% and the Dow Jones Industrial Average added 0.1%.

In the commodities markets, Brent crude oil rose 0.81% to $US 84.60 per barrel, whereas gold was up 0.83% at US$1,813.16.

Turning to bond markets, the yield on 2-year government debt is steady at 3.25% and 10-year at 3.82%. Looking abroad, the yield on 2-year US Treasury notes is 4.39% and the yield on 10-year US Treasury notes rose to 3.85%. It hit 67.31 US cents, up from 66.25.

Asia

Asia-Pacific stocks advanced, with the Shanghai Composite Index up 1%. Hong Kong’s market was closed on a public holiday on Tuesday.

“China is the flavor of the day for markets at the moment,” said Hani Redha, a portfolio manager at PineBridge Investments. “Without it, it was pretty obvious to us we were going to have a pretty severe global recession. Now you can downplay that."

Europe

British markets were closed for a public holiday on Tuesday, and the British FTSE 100 had closed Friday a bit higher.

The pan-European Stoxx Europe 600 Index finished up 0.1% at 428.00, as shares of oil-related companies rose with crude oil prices. Germany’s DAX added 0.4%, and France’s CAC-40 picked up 0.7%.

North America

Stock indexes in the United States were mixed after China announced that it would reopen its borders next month, firming the belief among investors that the thaw of the world’s second-largest economy will help sustain global growth. Bond yields climbed.

China has kept some of the world’s strictest coronavirus lockdown measures, which have slowed its economy to a crawl. And lifting travel quarantine requirements for Covid-19 caseloads on international arrivals early next month might give China’s economy a lift as travel picks up.

That could help the world economy at a moment when many nations, including the United States, have raised interest rates to try to tamp down inflation. The Federal Reserve has already signaled its intention to lift rates through the spring.

Yet Covid-19 is spreading quickly across China as the country reopens, leading to reports of overcrowded hospitals and overwhelmed crematoriums. Investors are contrasting the effects of the outbreak with what the reopening will look like for the global economy over the longer term.

“China is really full on with their zero Covid abandonment and that will have growing pains,” said Michael Reynolds, vice president of investment strategy at Glenmede. “It’s very likely that they just have an explosion in case counts there, and that’s going to be economically disruptive to the downside for them.”

Tesla, the S&P 500’s worst performer on Tuesday, had extended a shutdown of its Shanghai manufacturing plant amid the outbreak over the weekend. Shares of Tesla, which were already off for seven straight days as of Tuesday, dropped 8.4 percent around midday. The electric-vehicle company’s shares are down more than 40% this month.

Some of the resulting disruption from the virus’s China-driven spreading risk for U.S. companies, according to Louis Navellier, chief investment officer at money-management firm Navellier & Associates.

“There is a cloud over companies with a lot of China exposure for now,” said Mr. Navellier.