China's markets are set to resume trading today following the Lunar New Year holiday, with investors optimistic about sustaining the positive momentum observed across the region last week despite indications that U.S. inflation, and consequently interest rates, could run persistently higher than initially anticipated, Asian stocks have been on a decent run of late.

The MSCI Asia & Pacific recorded its most robust performance of the year last week, marking a gain of 2%. Moreover, it achieved its longest weekly winning streak over a year, with four consecutive weeks of upward movement. This positive trend has buoyed global investor confidence in the region's markets, fueling hopes for continued growth and stability in the quarters ahead.

There are indications that the prevailing gloom surrounding China's economic outlook may dissipate, albeit temporarily. Equities have shown signs of recovery from five-year lows, and official figures released on Sunday revealed that tourism revenues during the Lunar New Year holidays surpassed pre-COVID levels and hotel sales at major Chinese e-commerce platforms surged by more than 60% during the Chinese New Year holidays,

In addition, China’s average daily consumer spending on Meituan online platforms jumped more than 155% from the same period in 2019, according to Shanghai Securities News.

This data will provide an alka seltzer moment ( a source of relief) for policymakers grappling with challenges such as slowing economic growth, deflation risks, subdued consumer demand, and a collapse in the property sector. However, while the surge in tourism provides a glimmer of hope, its long-term sustainability remains uncertain.

The Japanese markets continue to experience a boom, showing no signs of losing momentum. The Nikkei surged by 4.3% last week, bringing its year-to-date gain to 15%. This impressive performance has been bolstered by growing optimism surrounding corporate Japan's earnings outlook and a notably weak currency.

Some investors may consider profit-taking opportunities as the Nikkei approaches new all-time highs as many wonder how long the weaker currency, which has supported exporter profits hugely, good times will last.

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