China Stimulus Momentum Extends Asian Stocks Rally: Markets Wrap

By Pune Media On Sep 27, 2024 52

(Bloomberg) — Stocks in Asia extended gains as risk appetite across financial markets got a further boost from China’s latest stimulus measures and upbeat US momentum.

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China’s benchmark CSI 300 Index was set for its biggest weekly gain since 2008 after officials pledged to increase fiscal support and stabilize the property sector to revive growth. Further bullishness came from US economic data overnight while Hong Kong’s tech index hit its highest in over a year.

Stimulus in the world’s two largest economies has been a catalyst for markets this week, with China lowering the amount of cash banks must keep in reserve on Friday, ahead of a weeklong holiday. The Federal Reserve’s preferred inflation indicator and a snapshot of consumer demand are both due later Friday, and will provide additional cues on the path for US interest rates.

Today’s Asian market is “totally driven by China stimulus and support to overall global growth as a consequence,” said Matthew Haupt, a portfolio manager at Wilson Asset Management International. “We are still waiting for more stimulus to give this rally more duration.”

The yen weakened and Japanese bond futures rose on increasing bets that Sanae Takaichi, considered to be an opponent of interest rate hikes, will be Japan’s next leader. Adding to the dovish picture, consumer inflation in Tokyo eased this month after outgoing Prime Minister Fumio Kishida reinstated energy subsidies to help households cope with one of the hottest summers on record.

The People’s Bank of China unleashed one of the country’s most daring policy campaigns in decades on Tuesday, with Beijing rolling out a strong stimulus package in a push to shore up the slowing economy and investor confidence. The moves sent Chinese shares soaring with the frenzy resulting in delays at Shanghai’s stock exchange.

Holding the politburo “meeting in September rather than waiting until the normally scheduled December meeting is in itself a signal that the authorities are willing to take more urgent action to achieve the 5% growth target,” senior analysts including Robert Carnell at ING Groep NV said in a note. “We saw a more aggressive-than-expected policy package from the PBOC this week and it is reasonable to expect other policies will soon follow.”

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Shares of New World Development surged as much as 24% in Hong Kong on Friday, the most since 1998, as the stock resumed trading after being suspended when the indebted firm announced its chief executive officer was stepping down.

As for the US, revised data showed the US economy in better shape than initially expected, spurred mainly by bigger consumer-driven growth fueled by robust incomes. A decline in US jobless claims underscored the resilience of the labor market. But investors tuning into commentary from Fed Chair Jerome Powell on Thursday didn’t get any details on the economic outlook or path for monetary policy.

Futures for US indexes softened Friday after the S&P 500 climbed to its 42nd closing record of this year. The dollar edged higher on Friday, while 10-year US Treasury yields were flat.

In commodities, oil extended a sharp two-day drop, putting prices on course for a substantial weekly decline, on prospects of more supply from OPEC members Saudi Arabia and Libya. Copper rallied back above $10,000 a ton and iron ore broke through $100 while gold was little changed after hitting yet another record high on Thursday.

Meanwhile, Sri Lanka’s central bank kept its benchmark interest rates unchanged in its first meeting since a new president was elected and uncertainty over the International Monetary Fund loan program looms.

Key events this week:

Eurozone consumer confidence, Friday
US PCE, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 1:32 p.m. Tokyo time
Nikkei 225 futures (OSE) rose 1.6%
Japan’s Topix fell 0.2%
Australia’s S&P/ASX 200 was little changed
Hong Kong’s Hang Seng rose 3.5%
The Shanghai Composite rose 2.1%
Euro Stoxx 50 futures rose 0.3%

Currencies

The Bloomberg Dollar Spot Index rose 0.2%
The euro was little changed at $1.1166
The Japanese yen fell 0.5% to 145.48 per dollar
The offshore yuan fell 0.3% to 6.9967 per dollar
The Australian dollar fell 0.3% to $0.6877

Cryptocurrencies

Bitcoin rose 1% to $65,304.9
Ether rose 0.5% to $2,644.6

Bonds

The yield on 10-year Treasuries was little changed at 3.79%
Japan’s 10-year yield declined 1.5 basis points to 0.815%
Australia’s 10-year yield advanced two basis points to 3.96%

Commodities

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Winnie Hsu.