- Asia-Pacific shares edge higher on China stimulus despite light calendar.
- Hang Seng rallies as Country Garden wins creditors approval for delayed bond coupon payment.
- Mixed updates about US-China ties, US Labor Day holiday restricts market moves.
- Risk catalysts eyed for clear directions, China inflation will be crucial to watch.
The risk appetite improves in Asia during a sluggish start to the week elsewhere as China defends the region’s bulls whereas the US Labor Day holiday allows policy hawks to take a breather. Further, the risk-positive news about China’s struggling real-estate plays Country Garden also underpins the cautious optimism even as the Sino-US headlines prod bulls.
While portraying the mood, the MSCI’s index of Asia-Pacific shares outside Japan rises to the highest level in a month, up 1.20% intraday at the latest, whereas Japan’s Nikkei 0.50% on a day by the press time.
It’s worth noting that Hong Kong’s Hang Seng resumes trading after a long weekend, due to the off on Friday, while posting more than a 2.0% jump on a day as Country Garden gains the creditor’s approval for onshore bond payment’s delay.
China’s government established a special cell to promote the private economy and open up barriers for the services industry and bolstered the sentiment early Monday, following a slew of measures to defend the world’s second-largest economy.
Among the major moves, the People’s Bank of China’s (PBoC), heavy cut to its foreign exchange reserve requirement ratio (FX RRR) to 4% from 6.0% effective from September 15 gained major attention. On the same line a slew of China banks cut interest rates on Yuan deposits to ease the pressure from lower mortgage rates announced previously. Additionally, Reuters cited four people familiar with the matter to report that China is likely to step up action to revive the country’s property sector.
Alternatively, the US-China tension, mainly due to the concerns that American businesses are less comfortable in Beijing, as well as US President Joe Biden’s readiness to restore ties with Taiwan, prods the market’s optimism amid a sluggish session.
Elsewhere, the disappointing prints of Australia’s Company Gross Operating Profits for Q2 2023 and Japan’s upbeat Monetary Base for August underpins the upbeat performance of Australia’s ASX and Japan’s Nikkei 225, mainly backed by Chinese equities. It’s worth noting that shares in New Zealand buck the trend with minor losses as New Zealand’s Terms of Trade Index improves in Q2 2023.
Above all, the receding odds of the Federal Reserve’s (Fed) hawkish moves in the future join China measures to keep the Asia-Pacific buyers hopeful, especially amid the US Labor Day holiday.
On a broader front, the US Dollar Index (DXY) snaps a two-day winning streak with mild losses to around 104.15 whereas the S&P 500 Futures print mild gains. It’s worth noting that the benchmark US 10-year Treasury bond yields dropped in the last two consecutive weeks after rising to the highest levels since 2007, to 4.18% at the latest.
Also read: Forex Today: The Dollar doesn’t give up