Asian shares mostly sustained gains, with Chinese stocks losing momentum following an earlier rally triggered by news of a new market rescue package. The Bank of Japan’s decision to maintain its policy influenced market dynamics, leading to a decline in the yen.
Chinese firms listed in Hong Kong initially surged by 3.8% but later pared gains to 2.7% after reports that authorities are aiming to mobilize around 2 trillion yuan ($278 billion) from offshore accounts of Chinese state-owned enterprises. This initiative is part of a stabilization fund intended to purchase onshore shares. However, the CSI 300 mainland benchmark briefly shifted to a 0.2% loss, reflecting lingering skepticism about the effectiveness of these measures.
Aninda Mitra, a macro and investment strategist at BNY Mellon Investment Management, acknowledged the responsiveness of authorities but expressed concerns about the adequacy of the stock market package, which accounts for less than 2% of the GDP.
Japanese equities continued their upward trajectory, heading for a third consecutive day of gains after the Bank of Japan kept its monetary policy unchanged and adjusted economic projections without providing clear hints about the potential end of the negative interest rate.
In other parts of Asia, stocks in South Korea and Australia experienced positive movements. Remarkably, India’s stock market surpassed Hong Kong’s, becoming the world’s fourth-largest share market for the first time.
While Chinese equities face lingering concerns, the US market remains optimistic, with investors considering strong economic signals and potential corporate earnings. Wall Street shares are recovering from a challenging start to the year, fueled by expectations of Federal Reserve rate cuts and continued growth in the artificial intelligence sector.
The S&P 500 hovered around 4,850, and Treasuries remained flat in early Asia trading after a two-basis-point decline in 10-year yields on Monday. The dollar saw minimal changes.
Investor sentiment in the US has shifted from anticipating aggressive rate cuts to perceiving the economy as resilient, regardless of rising interest rates. Despite reaching record highs last week, a closer examination reveals that the market’s valuations are not as expensive as they appear.
Looking ahead, key events this week include Eurozone consumer confidence, Canada rate decision, Eurozone and US S&P Global Services & Manufacturing PMI, Eurozone ECB rate decision, Germany IFO business climate, US GDP, and Bank of Japan’s minutes of policy meeting.
Market Movements:
- S&P 500 futures: Little changed
- Nikkei 225 futures: Rose 0.3%
- Japan’s Topix: Rose 0.2%
- Australia’s S&P/ASX 200: Rose 0.6%
- Hong Kong’s Hang Seng: Rose 2.5%
- Shanghai Composite: Fell 0.3%
- Euro Stoxx 50 futures: Little changed
- Nasdaq 100 futures: Little changed
Currency Movements:
- Bloomberg Dollar Spot Index: Little changed
- Euro: Little changed at $1.0893
- Japanese Yen: Little changed at 148.23 per dollar
- Offshore Yuan: Rose 0.4% to 7.1764 per dollar
- Australian Dollar: Rose 0.4% to $0.6593
Cryptocurrency Movements:
- Bitcoin: Rose 0.4% to $39,967.87
- Ether: Rose 0.5% to $2,337.72
Bond Movements:
- 10-year Treasuries: Yield declined one basis point to 4.09%
- Japan’s 10-year yield: Declined one basis point to 0.640%
- Australia’s 10-year yield: Declined three basis points to 4.19%
Commodity Movements:
- West Texas Intermediate crude: Little changed
- Spot gold: Rose 0.2% to $2,025.17 an ounce
