Fri, December 08, 2023

Finance: Asian Shares Boosted by Chinese Data Backing

Stock market update

On Monday, the world’s second-biggest economy is seen to be stabilizing a ramped-up stimulus from Beijing after encouraging Chinese data. Also, Investors were reassured while Asian shares progressed.

Last year, the growth of the second quarter economy decreased to 6.2%. A separate data showed the country’s industrial production and retail sales which finance records conveniently beat forecasts.

The records show it as the weakest pace in at least 27 years for the second quarter economy.

Meanwhile, Beijing might temper further stimulus as equity markets were uneven in the wake of the Chinese data as some predicted.

Kicking five straight weeks of increases, last week it dropped more than 1%. MSCI’s broadest index of Asia-Pacific shares outside Japan lost confidence to gain 0.2% higher at 526.72 points.

As Japan closed for a public holiday, expectations for trading were light.

Australian shares glided 0.4%, while South Korea’s KOSPI was mostly even. Chinese stocks cut back early losses with the blue-chip index up 0.4%. Hong Kong’s Hang Seng index gained 0.3%.

An analyst in Westpac, Frances Cheung, said, “Investors may be scaling back easing expectation upon today’s data as fiscal measures appear to be working.”

She also added, “That said, we believe the PBoC will still be supportive of liquidity.”

Furthermore, she indicated that the expected yields are stable, and any temporary bearishness could be expressed via swaps.

Additional clues regarding the health of the world’s largest economy will be provided in its finance figures from the U.S. retail sales and industrial production data later in the week.

On Wednesday, the “Beige Book” will be released by the U.S. Federal Reserve. It is where investors look for comments on how trade conflicts were upsetting business point of view.

Finance: Update on Financial Markets

Wibest – Finance: China stocks concept.

A level on its finance that was not seen since July 4 in currency markets. The Australian dollar soared to a high of $0.7033.

The greenback slightly advanced to 96.871 against a basket of major currencies.

As markets were fully priced in the chance of a 25-basis-point cut to U.S. interest rates, the dollar index plunged for three days in a row.

A 50-bps reduction in the U.S. interest rates is also likely to happen.

Since early June, the dollar marked up from its lowest at 108.04 versus the Japanese yen. It was after three successive sessions of gains the single currency was slightly lower at $1.1267.

The prospects of the Fed that are keeping the rates supportive have shown bonds gathering with ten-year U.S. Treasuries under the current Fed rate range of 2.25%-2.50%.

In a note, Morgan Stanley strategist Hans Redeker told clients, “Dovish Fed rhetoric has rendered a July rate cut, in the market’s eyes, as a fait accompli: it’s not if they cut but by how much.”

Moreover, Redekar indicated that the short dollar/long yen position would be re-entered by the bank.

He also added, “If markets are disappointed, the yield curve would likely flatten, the USD strengthen, and financial conditions tighten.”

“These forces would exacerbate the already considerable headwinds facing the global economy.”

To boost global trade and commodity prices, the global reflation needs a weaker USD.

As per the global asset fund flows tracker, investors were seen to be supporting money against bonds and money market funds. This is amid worries about the continuous slow world economic growth and low inflation.


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