Asia’s major stock indexes enjoyed another positive day, rallying to recent highs with investors buoyed by Beijing’s latest efforts to shock its struggling economy back into life.
China has halved stock trading stamp duty, loosened margin loan rules, put the brakes on new listings and approved new retail funds in recent days – signalling, at least, a resolve to steady the market.
Selling into Monday’s initial bounce, after the measures were announced over the weekend, foreign investors were net buyers of about $500 million in Chinese stocks on Tuesday, perhaps in the hope that more substantive aid will follow.
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The Shanghai Composite Index rose 1.20%, or 37.25 points, to 3,135.89, while the Shenzhen Composite Index on China’s second exchange surged 2.69%, or 51.13 points, to 1,951.63.
The Hang Seng Index gained 1.95%, or 353.29 points, to 18,484.03, as tech giants and mainland property developers climbed, and the Hang Seng China Enterprises Index jumped 2.25%.
However, pressure remained on China Evergrande, and the builder which once traded above HK$30 a share fell 10% to HK$0.31 in its second session back from suspension – highlighting the heavy doubts that remain over the country’s debt-stricken property sector.
And there was a warning from The Bank of America which said the next 2-3 weeks are an important window for Beijing’s policy moves. China’s economy and markets are expected to see more downward pressure in the next two quarters, without more material easing measures in near term, it predicted.
Japan’s Nikkei share average advanced to a two-week high, buoyed by overnight gains in Wall Street, although nerves ahead of potentially pivotal US economic data this week limited the upside.
Wall Street’s three main indexes all gained 0.6% or more overnight. However, a data-heavy week culminating in monthly US payrolls figures on Friday has taken on added importance after Federal Reserve Chair Jerome Powell suggested rates could rise further.
The Nikkei rose as much as 0.68% to 32,389.12 early in the session, its highest since August 15. However, gains fizzled mid-day and the index ended 0.18% higher at 32,226.97. The broader Topix added 0.16%.
Elsewhere across the region, in earlier trade, Sydney, Seoul, Singapore, Mumbai, Taipei and Jakarta were also up. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1%.
Investors Wait on US Data
US futures were flat. European futures rose 0.2% and FTSE futures rose 0.8% to point to a positive return from a day’s holiday in London.
Later in the day, investors’ focus will be on US data that may determine whether or not interest rates need to rise further.
Job openings figures are due, followed by broader labour data and the ISM survey on Friday, and bond traders were positioning for a soft turn in the numbers.
US Treasuries extended overnight gains, driving two-year yields down five basis points (bps) to 5% and 10-year yields down two bps to 4.1922%.
That put some gentle pressure on the dollar, which has slipped below its 200-day moving average to $1.0833 per euro and was slightly lower on other majors.
The yen remained pinned near Monday’s 10-month low, for a loss of some 10% on the dollar this year.
Traders are wary that its weakness might soon prompt government intervention, and at 146.30 per dollar it was barely moved by a government report suggesting an inflection point in the country’s years-long battle with deflation.
In commodities, Brent crude futures slipped 0.2% to $84.27 a barrel.
Key figures
Tokyo – Nikkei 225 > UP 0.18% at 32,226.97 (close)
Hong Kong – Hang Seng Index > UP 1.95% at 18,484.03 (close)
Shanghai – Composite > UP 1.20% at 3,135.89 (close)
London – FTSE 100 > UP 1.49% at 7,448.16 (0933 BST)
New York – Dow > UP 0.62% at 34,559.98 (Monday close)
- Reuters with additional editing by Sean O’Meara
Read more:
Japan May be Near The End of its 25-Year Fight With Deflation
Chinese Investors Ploughing Into Foreign Assets Via ETFs, QDII Scheme
Hang Seng Enjoys Stimulus Boost, Bargain Buyers Lift Nikkei
