China’s massive stimulus package boosts Asian stocks: Markets Wrap

(Bloomberg) — Asian shares rose after China’s central bank announced stimulus measures in an effort to meet its economic growth target for this year and halt a stock market sell-off.

Most read from Bloomberg

Hong Kong stock benchmarks rose more than 2% at the open, while mainland Chinese shares also rose. The MSCI Asia Pacific Index rose 0.7%, with Japanese benchmarks up more than 1% after reopening from a holiday. The yield on China’s 10-year government bond fell to 2% for the first time in history.

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

“Market participants may be pleased with what they see today,” said Jun Rong Yeap, a market strategist at IG Asia. The efforts “could trigger a near-term recovery in Chinese equities as the latest move eases earlier concerns about the authorities’ inaction.”

U.S. stock futures fell slightly after the S&P 500 closed 0.3% higher in the previous session, slightly off last week’s all-time high.

Data released Monday showed U.S. business activity grew slightly more slowly in early September as expectations deteriorated and a gauge of received prices climbed to a six-month high, boosting confidence that the world’s largest economy can make a soft landing. Investors now await data on the Fed’s preferred price gauge and U.S. personal spending later this week.

Read more about 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 betting on nearly three-quarters of a point of policy easing by year-end, suggesting at least another jumbo rate cut is on the horizon.

Chicago Fed Chairman Austan Goolsbee said that as inflation approaches the central bank’s target, the focus must shift to the labor market and “that likely means many more rate cuts in the year ahead.”

Minneapolis Fed chief Neel Kashkari also pointed to the weakness in the labor market and said he favors cutting rates by another half a percentage point by the end of the year. His Atlanta Fed colleague, Raphael Bostic, took a dovish stance. Bostic said starting the central bank’s cutting cycle with a big step would help bring rates closer to neutral levels, but officials should not commit to a series of excessive steps.

The story continues

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

Gold stabilized near a record high after several Fed officials appeared to leave the door open for additional large rate cuts. Oil rose slightly after Israel launched airstrikes on Lebanon, killing nearly 500 people and raising regional tensions.

Important events this week:

• Australia interest rate decision, Tuesday

• Japan Jibun Bank Manufacturing PMI, Services PMI, Tuesday

• Mexican CPI, Tuesday

• Bank of Canada Governor Tiff Macklem speaks Tuesday

• Australian CPI, Wednesday

• China’s Medium Term Lending Facility Rate, Wednesday

• Sweden interest rate decision, Wednesday

• Swiss interest rate decision, Thursday

• ECB President Christine Lagarde speaks on Thursday

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

• Fed Chairman Jerome Powell delivers pre-recorded speeches at the 10th annual US Treasury Market Conference, Thursday

• Mexico interest rate decision, Thursday

• Japan Tokyo CPI, Friday

• Chinese Industrial Profits, Friday

• Eurozone consumer confidence, Friday

• US Consumer Confidence PCE, University of Michigan, Friday

Some of the major moves in the markets:

Shares

• S&P 500 futures were little changed at 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 remained unchanged at $1.1111

• The Japanese yen remained virtually unchanged at 143.66 per dollar

• The offshore yuan remained virtually unchanged at 7.0595 per dollar

Cryptocurrency

• Bitcoin fell 0.5% to $63,003.3

• Ether fell 1.2% to $2,630.29

Bonds

• The yield on 10-year government bonds remained virtually unchanged at 3.74%

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

• The Australian 10-year yield fell two basis points to 3.94%

Raw materials

This story was produced with the help of Bloomberg Automation.

–With assistance from Mark Cudmore.

Most read from Bloomberg Businessweek

©2024 Bloomberg LP