Chinese Stocks Resume Rally, Oil Gains on Mideast: Markets Wrap

(Bloomberg) — Stocks in China jumped after authorities released details on stimulus measures, with optimism about the the global economy building after US stocks set a fresh high overnight. 

Asian equities rose across the board on Thursday, with a benchmark of mainland Chinese shares clawing back some of the previous day’s losses. Treasuries were steady in Asia, while oil gained as traders watched for an Israeli response to Iran’s missile attack. The Bloomberg Dollar Spot Index and the euro were little changed. 

While the promise of new policy stimulus gave Chinese markets a shot in the arm in late September, concerns the deployed sum won’t be enough snapped a blistering rally in mainland shares on Wednesday. While US inflation data later on Thursday will provide detail as to the path of Federal Reserve policy, investors in China will look to a press conference by the finance ministry on Saturday for clues on fiscal stimulus. 

“After a few days of heavy profit taking, we expect the offshore market to move on to the second phase of the rally, which features slower gains, higher volatility but with the basics – earnings and valuations – back in focus,” said Richard Tang, China Strategist and Head of Research Hong Kong at Julius Baer Group Ltd. 

Louisa Fok, a China equity strategist at Bank of Singapore, said two trillion yuan ($283 billion) of stimulus is “now becoming the consensus,” with probably half of that going to local governments. If a majority of the remainder goes to consumption, it will be positive for markets, she said.

Elsewhere in Asia, Taiwan Semiconductor Manufacturing Co. posted a better-than-expected 39% rise in quarterly revenue on Wednesday. Markets are closed in Taiwan on Thursday. Indian shares gained even as quantitative strategists at Bernstein cut their equities rating to underweight from neutral.

US Inflation

US consumer price data to be released later Thursday is expected to show inflation further moderating, supporting the Fed’s anticipated easing in the coming months. Despite this, market pricing indicates the likelihood of another 50 basis point rate cut is all but off the table following last week’s strong jobs report. 

“Policymakers agree inflation is fading and they see potential weakness in job growth,” said David Russell at TradeStation. “That keeps rate cuts on the table if needed. The bottom line is that Powell might have the market’s back headed into the year end.”

In commodities, crude edged higher after a two-day decline, with Brent trading near $77 a barrel. The market remains on edge about Israel’s intentions to launch a retaliatory strike against Tehran, which has sparked fears about an all-out war. Iran has warned it’s ready to launch thousands of missiles if needed.

President Joe Biden has discouraged an attack on Iranian oil infrastructure, and spoke with Israeli Prime Minister Benjamin Netanyahu on Wednesday for the first time in over a month.

Key events this week:

• US CPI, initial jobless claims, Thursday
• Fed’s John Williams and Thomas Barkin speak, Thursday
• JPMorgan, Wells Fargo kick off earnings season for the big Wall Street banks, Friday
• US PPI, University of Michigan consumer sentiment, Friday
• Fed’s Lorie Logan, Austan Goolsbee and Michelle Bowman speak, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were unchanged as of 2:03 p.m. Tokyo time
• Nikkei 225 futures (OSE) rose 0.3%
• Japan’s Topix rose 0.2%
• Australia’s S&P/ASX 200 rose 0.4%
• Hong Kong’s Hang Seng rose 4.4%
• The Shanghai Composite rose 3.5%
• Euro Stoxx 50 futures were little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0941
• The Japanese yen fell 0.1% to 149.47 per dollar
• The offshore yuan rose 0.3% to 7.0736 per dollar
• The Australian dollar rose 0.3% to $0.6739

Cryptocurrencies

• Bitcoin rose 0.7% to $60,822.26
• Ether rose 1.6% to $2,392.96

Bonds

• The yield on 10-year Treasuries was little changed at 4.07%
• Japan’s 10-year yield advanced one basis point to 0.940%
• Australia’s 10-year yield advanced three basis points to 4.23%

Commodities

• West Texas Intermediate crude rose 0.9% to $73.90 a barrel
• Spot gold rose 0.2% to $2,614.17 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Abhishek Vishnoi, Joanna Ossinger and Masaki Kondo.

©2024 Bloomberg L.P.