China stocks tell 2 different stories about the economy – Yahoo Finance

Chinese stocks listed in the U.S. were mostly higher on Tuesday amid optimism around Beijing's decision to drop COVID-19 quarantine rules for inbound visitors, as the world's second-largest economy abandons its long-held "COVID Zero" policy.
But the slide in shares of EV makers like Tesla (TSLA) and a drop in Apple (AAPL) stock shows the all-clear hasn't yet been given on negative impacts from the Chinese economy.
And this divided reaction on Chinese stocks shows investors both holding out optimism about what the future has in store for business in China while also acknowledging the damage already done by the massive COVID-19 outbreak that has hit the country over the last month.
Shares of Chinese social network Weibo (WB) were up as much as 9% on Tuesday, while shares of Alibaba (BABA), (JD), and Tencent (TCEHY) all moved higher by more than 3%.
Outside China's consumer internet names, stocks like Wynn Resorts (WYNN) and Las Vegas Sands (LVS) were up more than 4%. Shares of Melco Resorts (MLCO) were up more than 8% on optimism for Macau's gaming sector after a challenging few years.
Crude oil was also higher by more than 1.5% on Tuesday, with WTI crude oil trading above $80 a barrel for the first time in three weeks amid hopes for increased global demand with China's economy reopening aggressively.
On the other hand, Apple shares were down as much as 1.5% on Tuesday, nearing their lowest level since June 2021 as concerns remain over the company's ability to keep pace with iPhone demand amid production disruptions in China.
Tesla shares fell more than 8% on Tuesday following reports production at its Shanghai factory had been suspended earlier than previously expected, with production in January also set to be reduced.
Shares of Chinese electric carmaker Nio (NIO) were also down more than 8% after the company said early Tuesday it was cutting its fourth quarter delivery forecasts due to disruptions related to China's outbreak of COVID-19.
Of course, for all of these companies, there is more to the story than a single headline about relaxed COVID rules in China.
Chinese consumer internet names were among the most harshly punished stocks dating back to early 2021 as investor pessimism about the Federal Reserve's response to inflation — i.e., significantly higher rates — set in. Recent rebounds in these names are chipping away at peak-to-trough declines that topped 70% earlier this year.
Apple, in contrast, has held up better in 2022 than its megacap peers like Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), and Meta Platforms (META). In a year when higher rates challenged valuations and concerns about the economy weighed on even the biggest companies in the market, Apple became a safe harbor for investors. As the year ends on an anxious note for U.S. investors, Apple too has proven sensitive to headlines around supply of its flagship product.
But Tuesday's market reaction offers a window into what appears set to be a key market storyline in early 2023, which is optimism about growth in China mixed with caution about a pandemic still raging in the country.
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