Asian stocks extend rally despite growing China Covid concerns

Asian stocks rode a global rally on Thursday, making broad gains as oil prices steadied at lower levels not seen since before Russia's invasion of Ukraine, though China was an exception as weak data signalled more pressure on the Covid-hit economy.

Futures markets pointed to the rally extending in Europe later in the session, despite an expected ECB rate hike and worries about an energy crisis. Euro Stoxx 50 futures rose 0.4% and FTSE futures edged up 0.09%.

Japan's Nikkei share average jumped 2.18%, breaking through the 28,000 psychological barrier for the first time this month as domestic exporters saw boosts from the weaker yen.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.57%, while Australia's S&P/ASX 200 gained 1.63%.

Chinese blue chips fell 0.12%, however, after the release of worse-than-expected trade data on Wednesday and an extension of the lockdown in the city of Chengdu that demonstrated no let-up in the country's strict zero-Covid policy.

"Today for Asia it's really a story of whether zero-Covid will continue to impact the Chinese economy, which will of course have a spillover effect in terms of imports," said Gary Ng, senior economist at Natixis in Hong Kong.

Hong Kong's Hang Seng index fell 0.35%.

All three major Wall Street indices made significant gains overnight as bond yields eased.

Markets are awaiting a speech by Federal Reserve Chairman Jerome Powell later in the day for signs of any let-up in the central bank's hawkish approach to tackling inflation.

"I think Powell will signal that the decision for September hasn't been made yet, but the Fed will remain data dependent," NatWest Markets analyst Jan Nevruzi wrote in a note.

CME Group's Fedwatch tool currently shows that expectations for a third successive 75-basis-point interest rate hike are at about 76%, up from 69% a week ago.

"The markets will probably adopt a wait-and-see approach in the short run," said Ng. "Whether it's 50 or 75 basis points will be important, but the most important thing is really about whether inflation can peak, and what is the rate hike path of the Fed going forward?"

The yen was hovering just below 144 per dollar after weakening almost as far as 145 overnight. The dollar index , which tracks the greenback against a basket of currencies of other major trading partners, was up slightly at 109.73.

The euro slipped 0.19% to $0.99885, after hitting a 20-year low of $0.9864 earlier in the week. The European Central Bank is widely expected to raise rates by 75 basis points (bps) later on Thursday (1215 GMT) to fight runaway inflation.

Oil prices recovered slightly from an overnight plunge but remained below $90 a barrel for the first time since early February on worries about global recession risks. US crude ticked up 0.88% to $82.66 a barrel, while Brent crude rose 0.85 to $88.75 per barrel.

Spot gold prices fell 0.15% to $1,715.07 an ounce, and leading cryptocurrency bitcoin was last down 0.29% at $19,326.00.