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China Stocks Boosted by Stimulus Pledge, Falling Covid Cases

China’s Premier Li Keqiang promised to revive disrupted supply chains, as a further fall in daily Covid cases in the country also lifted sentiment across the region


Asian stock markets
Tokyo's blue-chip shares advanced, benefiting from a rebound on Wall Street. Photo: Reuters.

 

China stocks were on the front foot on Thursday lifted by bargain-buying and further pledges of economic support for China’s economy.

China’s Premier Li Keqiang vowed to stabilise employment and revive disrupted supply chains, while a further drop in the number of daily Covid cases in the country sparked stimulus hopes.

Hong Kong shares also closed with strong gains following a positive lead from New York as traders welcomed leaders’ pledges to provide support to the stuttering US economy too.

 

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But traders across the region were closely watching if Beijing can get on top of its Covid outbreak and avert a Shanghai-like lockdown, as the capital closed some public spaces and ordered out three rounds of mass testing this week across a number of districts.

“It’s still too early for policymakers to give up the 5% growth bottom line for this year,” economists at Macquarie Capital said in a note. “Once the current Covid wave is under control, they will likely double down policy supports to make up for the loss from lockdowns.”

China’s blue-chip CSI300 index rose 0.7% to 3,921.11, the Hang Seng Index rose 1.65%, or 329.81 points, to 20,276.17, while the Shanghai Composite Index rose 0.58%, or 17.20 points, to 2,975.48.

The Shenzhen Composite Index on China’s second exchange dipped 0.71%, or 12.92 points, to 1,808.47.

Real estate developers and banks rose 3.9% and 2.1%, respectively, while liquor makers added 2.8%. Energy stocks gained 4.9% and coal miners jumped 6.3%, led by China Coal Energy and Shaanxi Coal Industry Co, with both up roughly 10% on robust Q1 results.

 

Nikkei, Nifty 50 Advance

Tokyo stocks closed higher as investors were cheered by solid corporate earnings and the Bank of Japan’s decision to stick with its monetary easing policies.

The benchmark Nikkei 225 index ended up 1.75%, or 461.27 points, at 26,847.90, while the broader Topix index advanced 2.09%, or 38.86 points, to 1,899.62.

Indian stocks were on the up too with Mumbai’s signature Nifty 50 index up 1.21%, or 206.65 points, to close at 17,245.05.

Sydney, Seoul and Wellington all rose more than 1%, while there were also gains in Singapore, Taipei, Manila and Jakarta. London, Paris and Frankfurt enjoyed healthy gains in early trade.

 

Yen Keeps Tumbling

In the currency markets, the dollar was on the brink of its highest in two decades, with the yen tumbling to its lowest since 2002 after the Bank of Japan doubled down on its ultra-loose monetary policy. 

The yen dropped to a 20-year low and breached the 130 per dollar level after the Bank of Japan vowed to buy unlimited amounts of 10-year bonds daily to defend its yield target. The yen was last at 130.28 per dollar.

The fall of the Japanese currency buoyed the dollar index to as high as 103.70, its strongest in five years. A further push above 103.82 would see it test levels not seen since late 2002.     

The stronger dollar will likely weigh on emerging markets, and also drag on the US economy, analysts said.

 

Key figures at 0810 GMT

Tokyo – Nikkei 225 > UP 1.8% at 26,847.90 (close)

Hong Kong – Hang Seng Index > UP 1.7% at 20,276.17 (close)

Shanghai – Composite > UP 0.6% at 2,975.48 (close)

London – FTSE 100 > UP 0.9% at 7,488.58

Brent North Sea crude > DOWN 0.6% at $104.69 per barrel

West Texas Intermediate > DOWN 0.5% at $101.55 per barrel

New York – Dow > UP 0.2% at 33,301.93 (Wednesday close)

 

  • Reuters with additional editing by Sean O’Meara

 

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Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

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