Stocks rise with metals, boosted by Chinese stimulus: Markets wrap

(Bloomberg) — Stocks rose in Asia after the government stepped up support for the Chinese economy and stock trading, boosting optimism. Metals rose.

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Mainland China stocks advanced while the Hang Seng Tech Index jumped by the most since the end of August, thanks to government support plans that include issuing additional sovereign debt and raising the budget deficit.

Struggling Chinese developer Country Garden Holdings Co. It defaulted on dollar bonds for the first time, amid the broader mortgage debt crisis that has rocked the Chinese economy. The dollar rose, while Asian stocks trimmed their gains and US futures continued their losses, after the release of this news.

Hong Kong is working to reverse a pandemic-era increase in stock trading fees as officials seek to boost its beleaguered real estate sector and revive the city’s status as a financial center. In a speech on Wednesday, Hong Kong Chief Executive John Lee detailed the policy and announced a plan to cut the home purchase tax to 7.5% from 15% for non-residents, as well as halve the tax on residents who buy a second home. Real estate stocks rose.

A gauge of Asian stock indexes headed toward a one-week closing high, with Japanese and Korean stocks rising linked to consumer demand and manufacturing in China. But stocks have pared their gains since then.

“Given that the money will continue to be used next year, this means that at least in the first half of next year, pro-growth policies will continue to have an impact,” Wang Qing, senior macroeconomic analyst at Golden Credit International, said in a report. Note, referring to the sovereign debt issuance plan. “We estimate that next year the overall economy will grow at a moderate to high speed of 5%.”

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Benchmark indices also traded higher in Japan, where shares of semiconductor equipment company Kokusai Electric Corp. opened lower. 15% higher than the initial public offering price. US stock futures fell after the Standard & Poor’s 500 index halted a five-day decline on Tuesday and was followed by mixed earnings that saw Microsoft rise and Alphabet fall in late US trading.

The Euro Stoxx 50 index indicated quiet trading at the open and investors will be watching the shares of several major banks after their earnings results. Deutsche Bank AG reported third-quarter net revenue in line with analysts’ average estimates, while Banco Santander SA’s net income came in better than expected.

Traders will also be watching Meta Platforms Inc., the parent company of Instagram and Facebook, as it is scheduled to report earnings later Wednesday.

Baht gains

At foreign exchange, the Thai baht advanced for a second day on the back of China’s plans, while aluminium, copper and iron ore all rose.

Elsewhere, the Australian dollar extended its gains on the back of higher-than-expected inflation data. Expectations that the Reserve Bank of Australia will raise interest rates on November 7 sent the currency higher and sent three-year government bond yields to 4.28%, a level last seen in 2011.

Interest rates on two-year Treasury bonds fell five basis points and the dollar was weaker against most of its G10 peers.

Bank of Japan officials are likely to monitor bond yield movements until the last minute before deciding whether to adjust the yield curve control program at next week’s policy meeting, according to people familiar with the matter. There was little change in the yen on Wednesday.

Meanwhile, the price of oil stabilized amid indications that the war between Israel and Hamas will remain under control for the time being. Rose gold.

Main events this week:

• Germany Ifo Business Climate, Wednesday

• Interest rate decision in Canada, Wednesday

• New home sales in the United States, Wednesday

• IBM, Meta earnings, Wednesday

• European Central Bank interest rate decision; President Christine Lagarde will hold a press conference on Thursday

• US Wholesale Inventories, GDP, US Durable Goods, Initial Jobless Claims, Pending Home Sales, Thursday

• Intel and Amazon earnings on Thursday

• Industrial profits in China, Friday

• Japan, Tokyo Consumer Price Index, Friday

• US Personal Consumption Expenditures Deflator, Personal Spending and Income, University of Michigan Consumer Confidence, Friday

• Exxon Mobil earnings on Friday

Some key movements in the markets:

Stores

• S&P 500 futures were down 0.3% as of 6:31 a.m. London time. The Standard & Poor’s 500 rose 0.7%.

• Nasdaq 100 futures fell 0.5%. The Nasdaq 100 rose 1%.

• Japan’s Topix index rose 0.9%.

• Australia’s S&P/ASX 200 index was little changed

• The Hang Seng Index in Hong Kong rose 1%.

• The Shanghai Composite Index rose 0.4%.

• Euro Stoxx 50 futures were little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed

• There was little change in the euro at $1.0600

• There was little change in the Japanese yen at 149.83 to the dollar

• There was little change in the yuan in external transactions at 7.3141 to the dollar

• The Australian dollar rose 0.4 percent to $0.6379

• There was little change in the pound sterling at $1.2170

Digital currencies

• Bitcoin rose 1.1% to $34,010.45

• Ethereum rose 0.8% to $1,786.29

Bonds

• The yield on the 10-year Treasury note rose one basis point to 4.83%.

• The yield on 10-year Japanese bonds rose 1.5 basis points to 0.855%.

• The Australian 10-year bond yield rose three basis points to 4.72%.

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This story was produced with assistance from Bloomberg Automation.

– With assistance from Rob Verdonk and Iris Ouyang.

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