Asian financial markets experienced a buoyant shift today, due in large part to China’s strengthened commitment to bolster its recovering economy. This reassuring move energized downtrodden stocks in Hong Kong and China, all while the US dollar took a breather ahead of this week’s highly-anticipated Federal Reserve gathering.
The larger landscape of Asian shares, as tracked by MSCI’s comprehensive index outside Japan, saw a rise of 1.2%, breaking free from a six-day downward spiral. Conversely, Japan’s Nikkei slid marginally by 0.22%.
The uplift in Asian markets was particularly noticeable in the 1.55% rise of the Shanghai Composite Index, and the remarkable 3.4% surge of Hong Kong’s Hang Seng Index. This positive leap comes in response to China’s higher authorities promising a ramped-up policy boost for their economy, with a focus on enhancing domestic demand and hinting at future stimulus measures.
Analysts at Saxo Markets discerned in this announcement a level-headed approach to economic impetus, featuring controlled promises – a subtle indicator of the economy’s recognized challenges, interpreted as a mildly optimistic signal.
Nevertheless, China’s real estate market lingers as an investor worry-spot. The industry’s stocks and bonds plummeted to near eight-month lows earlier this week, induced by concerns of a liquidity crisis at two key national developers.
However, as reported by state news agency Xinhua, China is ready to adjust and streamline property policies promptly, responding to “significant changes” in market supply and demand. Erin Xin, Greater China economist at HSBC, proposed that this could hint at an upcoming fine-tuning of property policies and a more encouraging tone for the sector.
In the currency realm, the offshore Chinese yuan made strides, strengthening by 0.4% against the US dollar, which eased 0.108% measured against six primary competitors. Meanwhile, the Japanese yen and the euro both advanced modestly against the dollar.
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Market speculators predict the European Central Bank (ECB) will raise interest rates by 25 basis points this Thursday, but future trajectories are uncertain. On American soil, business activity slowed to its lowest point in five months in July due to slowing growth in the service sector.
This US slowdown could be seen in a positive light by the Fed, eager to temper activity to curb inflation. Policymakers are predicted to hike interest rates by 25 basis points on Wednesday, widely believed to be the last increase in the Fed’s ongoing tightening cycle.
The energy market saw a modest rise with US crude up by 0.17% at US$78.87 per barrel and Brent at US$82.84, up 0.12%. Meanwhile, spot gold rose 0.4% to US$1,961.43 an ounce. The day also witnessed US wheat futures reaching a five-month peak, spurred by Russia’s attacks on Ukrainian ports, raising long-term concerns about global supply and food security.
Source: Malay Mail
