China’s Sweeping Stimulus Plan Lifts Asian Stocks: Markets Wrap

(Bloomberg) — Asian stocks rose after China’s central bank announced stimulus measures in a bid to reach this year’s economic growth target and stem a selloff in the equity market.

Most Read from Bloomberg

Equity benchmarks in Hong Kong jumped more than 2% at the open while onshore Chinese stocks also gained. The MSCI Asia Pacific Index rose 0.7%, with Japan benchmarks advancing more than 1% after reopening from a holiday. The yield on China’s 10-year government bond declined to 2% for the first time on record.

China will allow brokerages and funds to tap the central bank’s funding to buy stocks, adding support after the CSI 300 Index fell to more than a five-year low earlier this month. People’s Bank of China governor Pan Gongsheng announced a series of stimulus measures at a rare briefing Tuesday, including moves to boost banks’ lending to consumers and corporates, and a cut to its key short-term interest rate.

“Market participants may like what they see today,” said Jun Rong Yeap, a market strategist at IG Asia. The efforts “could drive a short-term rebound in Chinese equities as the latest move dispels previous concerns around the authorities’ inaction.”

US stock futures edged lower after the S&P 500 closed 0.3% higher in the previous session, a whisker away from last week’s all-time high.

Data released Monday showed US business activity expanded at a slightly slower pace in early September, while expectations deteriorated and a gauge of prices received climbed to a six-month high, stoking confidence the world’s largest economy can nail a soft landing. Investors are now awaiting data on the Fed’s preferred price metric and US personal spending later this week.

Read More on China:

The yield on policy-sensitive two-year Treasuries fell one basis point to 3.58% in Asian trading, while longer dated Treasuries were little changed. Traders have been wagering on nearly three-quarters of a point of policy easing by year end, suggesting at least one more jumbo rate cut is in store.

Chicago Fed President Austan Goolsbee said with inflation approaching the central bank’s target the focus should turn to the labor market and “that likely means many more rate cuts over the next year.”

Neel Kashkari at the Minneapolis Fed also pointed to weakness in the job market, saying he backs lowering interest rates by another half percentage point by year end. His counterpart at the Atlanta Fed, Raphael Bostic took a moderate stance. Starting the central bank’s cutting cycle with a large step would help bring interest rates closer to neutral levels, but officials should not commit to a cadence of outsize moves, according to Bostic.

Story continues

In other key events for Asia, the Reserve Bank of Australia is expected to hold the cash rate at a 12-year high of 4.35% on Tuesday — and keep it there until at least February. The nation’s 10-year yield dipped in early trading.

Gold steadied near a record high after several Fed officials appeared to leave the door open to additional large rate cuts. Oil edged higher after Israel launched airstrikes on Lebanon that killed nearly 500 people and boosted regional tensions.

Key events this week:

• Australia rate decision, Tuesday

• Japan Jibun Bank Manufacturing PMI, Services PMI, Tuesday

• Mexico CPI, Tuesday

• Bank of Canada Governor Tiff Macklem speaks, Tuesday

• Australia CPI, Wednesday

• China medium-term lending facility rate, Wednesday

• Sweden rate decision, Wednesday

• Switzerland rate decision, Thursday

• ECB President Christine Lagarde speaks, Thursday

• US jobless claims, durable goods, revised GDP, Thursday

• Fed Chair Jerome Powell gives pre-recorded remarks to the 10th annual US Treasury Market Conference, Thursday

• Mexico rate decision, Thursday

• Japan Tokyo CPI, Friday

• China industrial profits, Friday

• 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 10:44 a.m. Tokyo time

• Nasdaq 100 futures were little changed

• Japan’s Topix rose 1.1%

• Australia’s S&P/ASX 200 fell 0.1%

• Hong Kong’s Hang Seng rose 2.4%

• The Shanghai Composite rose 0.9%

• Euro Stoxx 50 futures rose 0.4%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was unchanged at $1.1111

• The Japanese yen was little changed at 143.66 per dollar

• The offshore yuan was little changed at 7.0595 per dollar

Cryptocurrencies

• Bitcoin fell 0.5% to $63,003.3

• Ether fell 1.2% to $2,630.29

Bonds

• The yield on 10-year Treasuries was little changed at 3.74%

• Japan’s 10-year yield declined 1.5 basis points to 0.815%

• Australia’s 10-year yield declined two basis points to 3.94%

Commodities

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Mark Cudmore.

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.