Asian stocks notched up a solid day’s work to start the week with traders consolidating positions ahead of what is expected to be a new round of central bank rate cuts.
The hoped-for burst of easing comes after last week’s hefty US rate reduction and traders are betting key US inflation figures due on Friday could flash a green light for more cuts.
China stocks rose for a fourth straight session, with the country’s 30-year treasury yield hitting a record low amid heightened expectations that Beijing will unveil fresh economic stimulus.
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Hong Kong shares, which are more sensitive to the US rate-cutting cycle that started last week, hit a three-month high before surrendering gains in afternoon trading.
China’s blue-chip CSI 300 index advanced 0.37% and the Shanghai Composite Index rose 0.44%, or 12.10 points, to 2,748.92. The Shenzhen Composite Index on China’s second exchange was ahead 0.14%, or 2.16 points, to 1,496.82.
Expectations of fresh stimulus were also fuelled by announcement that China’s top financial regulators including the central bank will jointly hold a press conference on Tuesday.
In Hong Kong, the sub-index of the Hang Seng tracking energy shares rose 1.1%, while the IT sector rose 0.41%, the financial sector ended 0.45% higher and the property sector dipped 0.33%.
The benchmark Hang Seng Index edged back 0.06%, or 11.46 points, to 18,247.11.
Elsewhere across the region, in earlier trade, Seoul, Singapore, Mumbai, Taipei and Manila rose, though Sydney, Jakarta and Wellington dipped. Tokyo was closed for a holiday.
The break in Japan made for thin trading and MSCI’s broadest index of Asia-Pacific shares outside the country added 0.3%, after bouncing 2.7% last week.
Eurostoxx 50 futures added 0.5%, FTSE futures 0.3% and DAX futures 0.4%. S&P 500 futures firmed 0.3% and Nasdaq futures added 0.6%.
Markets were still basking in the afterglow of the Federal Reserve’s half-point rate cut, with futures implying a 50% probability it will deliver another outsized move in November.
Much will depend on what the Fed’s preferred inflation gauge, the core personal consumption expenditures (PCE), shows on Friday. Analysts expect a 0.2% month-on-month rise taking the annual pace to 2.7%, while the headline index is seen slowing to just 2.3%.
US Shutdown Fears
The coming week also includes surveys on global manufacturing, US consumer confidence and durable goods.
One bank not easing is the Reserve Bank of Australia (RBA) which meets on Tuesday and is considered almost certain to hold at 4.35% as inflation proves stubborn.
Investors were also keeping a wary eye on negotiations to avoid a US government shut down with just days before the current $1.2 trillion in funding runs out on September 30.
Republican US House of Representatives Speaker Mike Johnson on Sunday proposed a three-month stop-gap funding bill but now it has to go to vote.
In currency markets, the dollar edged up 0.3% to 144.30 yen, having bounced 2.2% last week from a 139.58 low. The euro gained almost 3% last week to reach 161.09 yen, while holding firm on the dollar at $1.1160.
The US rate cut combined with lower bond yields helped keep gold up at an all-time peak of $2,630.93 an ounce.
Net long positions in Comex gold futures hit their highest level in four years last week, suggesting some risk of a pullback in the near term.
Oil prices firmed further, underpinned in part by tensions in the Middle East as Israel struck Hezbollah targets. Oil rallied around 4% last week on hopes lower borrowing costs would support global economic growth and demand.
Key figures
Tokyo – Nikkei 225 <> CLOSED
Hong Kong – Hang Seng Index < DOWN 0.06% at 18,247.11 (close)
Shanghai – Composite > UP 0.44% at 2,748.92 (close)
London – FTSE 100 > UP 0.18% at 8,244.81 (0936 BST)
New York – Dow > UP 0.09% at 42,063.36 (Friday close)
- Reuters with additional editing by Sean O’Meara
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