China’s blue chips jumped 3.5%, bringing the weekly rise to 14.6%, the most since November 2008
27 September 2024 - 12:34
byStella Qiu
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
A passerby walks past an electric screen displaying various Asian countries' stock price indexes outside a brokerage in Tokyo, Japan on December 30 2022. File Picture: REUTERS/Issei Kato
Sydney — Chinese stocks raced towards their best week since 2008 and helped lift Asian shares to two-and-a-half year highs after Beijing rolled out a huge stimulus package to revive the economy, while a sharp fall in oil prices bodes well for disinflation globally.
The yen fell 1% to three-week lows as markets bet Sanae Takaichi, the economic security minister who opposed interest rate hikes, could win the leadership contest of Japan's ruling Liberal Democratic Party on Friday.
European sharemarkets are set to open slightly higher, with Eurostoxx 50 futures adding 0.2% and FTSE futures up 0.1%. Wall Street futures were largely flat.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.5%, having hit its highest level since February 2022 earlier in the day. It was headed for a weekly gain of 5.3%, thanks to a huge turnaround in Chinese shares.
China’s blue chips jumped 3.5%, bringing the weekly rise to 14.6%, the most since November 2008.
Hong Kong’s Hang Seng index also gained 1.9% and was up 11.2% for the week, its best performance since 2009.
“Beijing seems finally determined to roll out its bazooka stimulus in rapid succession... Beijing’s recognition of the severe situation of the economy and lack of success in a piecemeal approach should be valued by markets,” said Ting Lu, chief China economist at Nomura.
“But eventually it is still necessary for Beijing to introduce well thought policies to address many of the deep-rooted problems, particularly regarding how to stabilise the property sector, which is now in its fourth year of contraction.”
As flagged, the People's Bank of China on Friday lowered banks' reserve requirement ratio by 50 basis points and cut the seven-day reverse repo rate by 20 bps. It also cut the 14-day reverse repo rate by 20 bps, the second reduction this week.
Reuters reported on Thursday that China planned to issue special sovereign bonds worth about 2-trillion yuan ($284.43bn) this year as part of a fresh fiscal stimulus.
Commodities have had a good week on Chinese stimulus. Iron ore prices clambered back above $100 a metric ton, copper broke above the key $10,000 a tonne mark, gold hit another record and silver scaled a 12-year top.
Oil was a loser and set for heavy weekly losses on a report that Saudi Arabia was preparing to abandon its unofficial price target of $100 a barrel for crude as it gets ready to increase output.
Brent futures fell 0.4% to $71.31 a barrel and are down 4.2% for the week. That should be good for global disinflation as central banks ramp up rate cuts, and bullish for consumer spending.
Yen skids
Results from Japan’s Liberal Democratic Party’s first-round balloting showed economic security minister Sanae Takaichi and former defence minister Shigeru Ishiba, amassed the most votes and qualified for the second round.
Markets are already betting Takaichi — a vocal critic of the Bank of Japan’s efforts to raise interest rates — could win as swaps imply there is just a 30% chance that the central bank could lift rates again by the year end.
The dollar rose 1% to ¥146.23 after the first round of balloting. The Nikkei rallied 1.8% and was up 5% for the week on the back of a weak yen.
“Risks of the BOJ being pushed to the dovish side are weighing on the yen now, but we have to remember that narrowing of the yield differentials, which is a key driver for yen, will likely remain Fed-driven and in favour of the yen,” said Charu Chanana, head of currency strategy at Saxo.
Treasury yields were steady in Asia, having risen overnight on low US weekly jobless claims that led markets to lower the odds of another outsize half point rate cut from the Fed in November to 51%, from 57% a day earlier.
Investors are waiting for the core personal consumption expenditures (PCE) price index — the Fed's preferred measure of inflation — later in the day. Forecasts are centred on a small monthly rise of 0.2%, as markets are split on the size of an expected Federal Reserve rate cut in November.
Two-year treasury yields were up 6 bps this week to 3.6348%, while 10-year yields rose 7 bps in the week to 3.789%.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
China stocks surge towards best week since 2008
China’s blue chips jumped 3.5%, bringing the weekly rise to 14.6%, the most since November 2008
Sydney — Chinese stocks raced towards their best week since 2008 and helped lift Asian shares to two-and-a-half year highs after Beijing rolled out a huge stimulus package to revive the economy, while a sharp fall in oil prices bodes well for disinflation globally.
The yen fell 1% to three-week lows as markets bet Sanae Takaichi, the economic security minister who opposed interest rate hikes, could win the leadership contest of Japan's ruling Liberal Democratic Party on Friday.
European sharemarkets are set to open slightly higher, with Eurostoxx 50 futures adding 0.2% and FTSE futures up 0.1%. Wall Street futures were largely flat.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.5%, having hit its highest level since February 2022 earlier in the day. It was headed for a weekly gain of 5.3%, thanks to a huge turnaround in Chinese shares.
China’s blue chips jumped 3.5%, bringing the weekly rise to 14.6%, the most since November 2008.
Hong Kong’s Hang Seng index also gained 1.9% and was up 11.2% for the week, its best performance since 2009.
“Beijing seems finally determined to roll out its bazooka stimulus in rapid succession... Beijing’s recognition of the severe situation of the economy and lack of success in a piecemeal approach should be valued by markets,” said Ting Lu, chief China economist at Nomura.
“But eventually it is still necessary for Beijing to introduce well thought policies to address many of the deep-rooted problems, particularly regarding how to stabilise the property sector, which is now in its fourth year of contraction.”
As flagged, the People's Bank of China on Friday lowered banks' reserve requirement ratio by 50 basis points and cut the seven-day reverse repo rate by 20 bps. It also cut the 14-day reverse repo rate by 20 bps, the second reduction this week.
Reuters reported on Thursday that China planned to issue special sovereign bonds worth about 2-trillion yuan ($284.43bn) this year as part of a fresh fiscal stimulus.
Commodities have had a good week on Chinese stimulus. Iron ore prices clambered back above $100 a metric ton, copper broke above the key $10,000 a tonne mark, gold hit another record and silver scaled a 12-year top.
Oil was a loser and set for heavy weekly losses on a report that Saudi Arabia was preparing to abandon its unofficial price target of $100 a barrel for crude as it gets ready to increase output.
Brent futures fell 0.4% to $71.31 a barrel and are down 4.2% for the week. That should be good for global disinflation as central banks ramp up rate cuts, and bullish for consumer spending.
Yen skids
Results from Japan’s Liberal Democratic Party’s first-round balloting showed economic security minister Sanae Takaichi and former defence minister Shigeru Ishiba, amassed the most votes and qualified for the second round.
Markets are already betting Takaichi — a vocal critic of the Bank of Japan’s efforts to raise interest rates — could win as swaps imply there is just a 30% chance that the central bank could lift rates again by the year end.
The dollar rose 1% to ¥146.23 after the first round of balloting. The Nikkei rallied 1.8% and was up 5% for the week on the back of a weak yen.
“Risks of the BOJ being pushed to the dovish side are weighing on the yen now, but we have to remember that narrowing of the yield differentials, which is a key driver for yen, will likely remain Fed-driven and in favour of the yen,” said Charu Chanana, head of currency strategy at Saxo.
Treasury yields were steady in Asia, having risen overnight on low US weekly jobless claims that led markets to lower the odds of another outsize half point rate cut from the Fed in November to 51%, from 57% a day earlier.
Investors are waiting for the core personal consumption expenditures (PCE) price index — the Fed's preferred measure of inflation — later in the day. Forecasts are centred on a small monthly rise of 0.2%, as markets are split on the size of an expected Federal Reserve rate cut in November.
Two-year treasury yields were up 6 bps this week to 3.6348%, while 10-year yields rose 7 bps in the week to 3.789%.
Reuters
JSE and rand muted after glittering week
Gold and silver slip but still head for weekly gain
Oil prices fall on better chances of boost to supply
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.