Asian stocks rallied on Friday with investor mood lifted by a slew of support measures aimed at boosting China’s struggling recovery.
Gains across the region were driven mostly by the mainland Chinese and Hong Kong markets and hopes of improving growth in the world’s No2 economy.
Bucking the trend was Japan where the Nikkei stock index extended its losing streak to four days, after the Bank of Japan kept stimulus unchanged and signalled it was in no rush to tighten policy.
The BoJ, as expected, maintained super-low interest rates and left its yield control policy unchanged.
The yen fell about 0.3% to 148.09 per dollar after the announcement but stopped short of breaking below Thursday’s low with traders wary of intervention especially as the BoJ added it was watching the impact of FX moves on Japan’s economy.
The Nikkei share average fell 0.52%, or 168.62 points, to close at 32,402.41, while the broader Topix was down 0.30%, or 7.14 points, to 2,376.27.
The benchmark index had earlier dipped to a nearly four-week low, tracking sharp declines on Wall Street amid worries about a more hawkish Federal Reserve.
China stocks bounced off 10-month lows on hopes of improving growth, but seven consecutive weeks of foreign outflows underscored lingering economic and geopolitical concerns toward the country. Hong Kong stocks also rebounded.
Recent bank forex purchase and settlement data showed $75.9 billion worth of outflows under the capital and financial account during the first eight months of the year.
The Shanghai Composite Index rose 1.55%, or 47.73 points, to 3,132.43, while the Shenzhen Composite Index on China’s second exchange was ahead 1.91%, or 35.90 points, to 1,913.53.
In Hong Kong, the Hang Seng Tech Index climbed 3.69%, but an index tracking mainland developers lost 0.2%. Ratings agency Moody’s on Thursday revised its outlook on four Chinese real estate firms to “negative” from “stable”.
The main benchmark Hang Seng Index gained 2.28%, or 402.04 points, to close at 18,057.45.
Elsewhere across the region, in earlier trade, Sydney, Singapore, Bangkok, Taipei, Jakarta, Manila and Wellington also rose, though Seoul and Mumbai were in the red.
MSCI’s broadest index of Asia-Pacific shares outside Japan touched a 10-month low before recovering to rise 0.4%, mostly driven by gains in Hong Kong and China.
The S&P 500 had dropped 1.6% overnight and is down 2.7% in a week when policymakers were at pains to sound hawkish, even if a peak in rates is near.
Federal Reserve officials lifted their 2024 rates projections, forcing investors to dial back bets on cuts next year and driving two-year yields above 5.2%.
In a split decision, the Bank of England left rates on hold for the first time in nearly two years, sending sterling to a six-month low, although Governor Andrew Bailey stressed that the job was unlikely to be done yet.
A surge in oil prices has also been unnerving investors, since it is likely to prolong the inflation pulse. Brent crude futures steadied at $93.51 a barrel on Friday and are up nearly 8% for September so far.
Elsewhere in foreign exchange markets the expectation of sticky US interest rates has supported the dollar, which reached a six-month peak on the euro overnight at $1.0671.
Tokyo – Nikkei 225 < DOWN 0.52% at 32,402.41 (close)
Hong Kong – Hang Seng Index > UP 2.28% at 18,057.45 (close)
Shanghai – Composite > UP 1.55% at 3,132.43 (close)
London – FTSE 100 > UP 0.26% at 7,698.59 (0935 BST)
New York – Dow < DOWN 1.08% at 34,070.42 (Thursday close)
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