Asian stocks rallied on Wednesday, fuelled by a mega bond issue by Beijing which raised hopes of a turnaround for the world’s No2 economy.
China’s top parliament approved a 1 trillion yuan ($137 billion) bond issue, state media reported, with the funds being earmarked for rebuilding disaster zones and improving infrastructure.
Japan’s Nikkei share average rose, continuing its rebound from a three-week low, boosted by Beijing’s fiscal package and with overnight gains on Wall Street providing an additional tailwind.
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The Nikkei ended the day up 0.67% at 31,269.92, but couldn’t maintain the momentum from the morning session when it rose 1.3% to 31,466.92, the strongest level since Thursday. The broader Topix was ahead 0.61%, or 13.67 points, to 2,254.40.
Of the Nikkei’s 225 components, 158 gained on Wednesday versus 67 that fell.
The Japanese earnings season has been underway since around the start of the month, but accelerates next week and peaks in mid-November.
Chinese stocks rose after the giant sovereign bond issue to support the economy. The boost in fiscal stimulus demonstrated the top leadership’s commitment to bolstering economic growth even as the 5% full year GDP growth target is almost guaranteed, analysts said.
The issuance of extra sovereign debt will widen the country’s 2023 budget deficit to around 3.8% of GDP from a previously set 3%, state media Xinhua said.
It is the first time since 2000 that China has expanded its budget deficit during the fiscal year and the fourth time in history that it has issued special sovereign debt.
China’s blue-chip CSI 300 Index rose 0.50%, while the Shanghai Composite Index climbed 0.40%, or 11.87 points, to 2,974.11. The Shenzhen Composite Index on China’s second exchange advanced 0.90%, or 16.28 points, to 1,817.18.
Hong Kong Developers Rise
In Hong Kong, homebuilders rose 0.99% on expectations of property easing measures and the benchmark Hang Seng Index gained 0.55%, or 93.80 points, to 17,085.33, snapping a four-day losing streak.
Elsewhere across the region, in earlier trade, Taipei, Singapore, Manila, Jakarta and Bangkok all rose, though Seoul, Mumbai and Wellington dipped.
MSCI’s broadest index of Asia-Pacific shares outside Japan, which hit its lowest since last November on Tuesday, rose 0.6%.
US Treasuries held onto a bounce-back after the 10-year yield breached 5% on Monday, with the benchmark yield firm at 4.82%.
Shares in Google parent Alphabet fell 6% in after-hours trade on investors’ disappointment at its slowing cloud business, while Microsoft shares rose nearly 4%, leaving Nasdaq 100 futures 0.4% lower in Asia trade.
European stock futures were steady, while oil and the euro were weighed by Tuesday’s weaker-than-forecast purchasing managers surveys on the continent. Euro zone lending data and a German business survey are due later in the session.
Japan’s Yen Steadies
In currency markets, the yen sat at 149.84, perhaps steadied by the persistent selling pressure that is driving rock-bottom Japanese yields a little higher. Ten-year Japanese government bond yields touched a decade high of 0.865%.
The Australian dollar was the standout gainer, rising more than 0.5% to touch a two-week high of $0.64.
Brent crude futures were steady at $87.92 a barrel, with Europe’s faltering economy prompting traders to wind back gains made in the wake of conflict in the Middle East.
The United States and Russia were among several nations pushing for a pause in fighting between Israel and Hamas to allow aid into the besieged Gaza Strip.
After touching $1,997 an ounce last week, spot gold traded at $1,971.
Bitcoin, meanwhile, seems to have awoken from long hibernation during the so-called “winter” that followed numerous scandals including the collapse of exchange FTX.
Bitcoin is up 15% this week mostly thanks to speculation that exchange-traded fund applications from BlackRock and others will succeed and drive capital into the asset class. Bitcoin last bought $34,158.
Key figures
Tokyo – Nikkei 225 > UP 0.67% at 31,269.92 (close)
Hong Kong – Hang Seng Index > UP 0.55% at 17,085.33 (close)
Shanghai – Composite > UP 0.40% at 2,974.11 (close)
London – FTSE 100 > UP 0.09% at 7,396.28 (0933 BST)
New York – Dow > UP 0.62% at 33,141.38 (Tuesday close)
- Reuters with additional editing by Sean O’Meara
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