Asian stocks advance after tech rally lifts Wall Street
October 09, 2024 / 07:20 IST
Concerns mounted that the latest burst of stimulus may be insufficient to convince investors of a sustainable rally in the country’s equity market
Chinese shares underperformed the region after investors paused on the rally with Beijing refusing to commit to more economic stimulus. Shares elsewhere in Asia gained.
The CSI300 index fell as much as 5%, almost erasing gains of yesterday, while stocks in Hong Kong gained 1.7% after the biggest tumble in 16 years Tuesday. Shares in Australia and Japan climbed Wednesday after a tech rally lifted Wall Street and bets on Federal Reserve rate cuts stabilized.
New Zealand’s dollar fell and bonds rose after the nation’s central bank delivered a 50 basis-point cut on its benchmark rate. It is the Reserve Bank of New Zealand’s second straight reduction after it began its easing cycle with a quarter-point cut in August.
Concerns mounted that the latest burst of stimulus may be insufficient to convince investors of a sustainable rally in the country’s equity market. A news report that cited Premier Li Qiang late Tuesday indicated China needs to introduce policies to stabilize growth and expectations, in a further sign Beijing is attempting to build confidence among investors.
Tuesday’s sharp drop in Hong Kong stocks “can be considered somewhat of a clearing event for purging some excess inflated overinflated expectations of stimulus from the market,” said Timothy Moe, Goldman Sachs’ chief Asia Pacific equity strategist. “We’ve level set things and I would think that from here we probably find a floor.”
Elsewhere in Asia, India will unveil its rate decision later today while South Korea will join FTSE Russell’s benchmark bond index, capping months of official campaigning and a overhaul of financial market infrastructure.
US Rate-Cut Expectations
Treasuries were little changed after steadying Tuesday following a run of selling in the prior four sessions, amplified by last week’s US jobs data that weighed on rate-cut expectations. With inflation data due later in the week, the US 10-year yield fell one basis point to just above 4%, while front-end yields fell by a sharper margin as investors parsed comments from Federal Reserve officials.
Story continues below Advertisement
Fed Bank of Boston President Susan Collins noted that rate cuts should be careful and data-based. Her Atlanta counterpart Raphael Bostic said while risks to inflation have come down, threats to the labor market have risen, though the economy is still strong. Governor Adriana Kugler said officials should keep the focus on bringing inflation to target, with a “balanced approach” that avoids a slowdown in jobs.
“The US data is not so strong that the Federal Reserve’s contribution to the global rate-cutting cycle looks set to end,” said Mark Haefele at UBS Global Wealth Management. “We therefore maintain our conviction for investors to position for lower rates.”