Asian stocks were largely in the green on Wednesday with support measures for China’s stumbling recovery and struggling markets boosting the mood on trading floors.
That saw China’s mainland markets and Hong Kong’s benchmark bouncing back after recently plummeting to multi-year lows as foreign investors headed for the exit doors in the first weeks of the year.
There was also a turnaround in Japan after it had surged to 34-year highs as profit-taking continued from the last session.
The Nikkei share average edged down 0.80%, or 291.09 points, to close at 36,226.48, while the broader Topix was down 0.51%, or 12.85 points, to 2,529.22.
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A hawkish tone from the latest Bank of Japan (BOJ) meeting also weighed on sentiment. A growing conviction that conditions for phasing out the BOJ’s huge stimulus were falling into place suggested that an end to negative interest rates may be in sight, possibly as soon as March.
Hong Kong stocks surged as hopes of Chinese authorities coming to the rescue of a battered market and news of Jack Ma scooping up Alibaba Group shares lifted market sentiment.
The Hang Seng Index jumped 3.56%, or 545.89 points, to 15,899.87, and the Hang Seng Tech Index was up as much as 4.24%, driven by the gains in benchmark heavyweight Alibaba.
Hong Kong’s indexes had plunged on Monday to 15-month lows in a broad selloff of Chinese stocks driven by worries over the economy and concerns 2024 will not bring a turnaround.
The mainland market mood remained fragile but the blue-chip CSI 300 Index moved ahead 1.40% after hovering near a five-year low it struck last week.
China’s cabinet said on Monday it would take forceful and effective measures to stabilise market confidence, and it was reported policymakers were looking to mobilise about 2 trillion yuan ($279 billion), mostly from offshore accounts of state enterprises, to fund equity buying through a stock connect link.
The Shanghai Composite Index rose 1.80%, or 49.80 points, to 2,820.77, while the Shenzhen Composite Index on China’s second exchange gained 1.25%, or 20.27 points, to 1,646.86.
Euro Zone PMI Figures
Elsewhere across the region, in earlier trade, there were also gains in Sydney, Bangkok, Mumbai, Wellington, Taipei and Manila but Seoul lost out.
The MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.4% but the index is down 5% in January, and is set for its worst monthly performance since August.
Futures indicated bourses in Europe were set to open higher, with the Eurostoxx 50 futures up 0.58%, German DAX futures up 0.59% and FTSE futures 0.19% higher.
Investor focus will be on manufacturing purchasing managers’ index (PMI) figures, which are seen as a good gauge of economic health, from the euro zone, Germany, France and Britain later in the day ahead of a European Central Bank (ECB) meeting on Thursday.
The ECB is widely expected to keep rates unchanged, but traders are pricing in as much as 130 basis points of interest rate cuts this year.
The yield on 10-year US Treasury notes was last at 4.120%, while the two-year Treasury yield, which typically moves in step with interest rate expectations, was at 4.332%.
US Dollar Eases
E-mini futures for the S&P 500 rose 0.29% as investors assessed a slew of corporate earnings.
The dollar index, which measures the US currency against six rivals, eased a touch and was last at 103.43.
The index is up 2% this month, on course for its strongest monthly performance since September as traders walk back their expectations of early and steep interest rate cuts from the Federal Reserve.
This week, the spotlight will switch to the US personal consumption expenditure (PCE) index data, the Federal Reserve’s preferred inflation gauge, as well as the S&P PMI readings, to assess the outlook for interest rates.
Markets are now pricing in a 47% chance of a rate cut in March from the Fed, according to the CME FedWatch tool, compared to the 88% chance of a rate cut priced in a month earlier.
US crude futures rose 0.12% to $74.46 per barrel and Brent futures were at $79.63, up 0.1% on the day.
Key figures
Tokyo – Nikkei 225 < DOWN 0.80% at 36,226.48 (close)
Hong Kong – Hang Seng Index > UP 3.56% at 15,899.87 (close)
Shanghai – Composite > UP 1.80% at 2,820.77 (close)
London – FTSE 100 > UP 0.33% at 7,510 (0933 GMT)
New York – Dow < DOWN 0.25% at 37,905.45 (Tuesday close)
- Reuters with additional editing by Sean O’Meara
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Hang Seng Bounces Back on Policy Boost, Nikkei Flattens Out
