Asia stocks rally as China’s stimulus lifts mood: Markets wrap

Stocks in Asia pushed higher after President Xi Jinping stepped up support for China’s economy, buoying optimism.

Mainland China shares advanced while the Hang Seng Tech Index jumped 5%, the most since the end of August, on the government’s support plans that include issuing additional sovereign debt and raising the budget deficit ratio. A gauge of Asian equity benchmarks headed for the highest close in a week as Japanese and Korean stocks related to China consumer and manufacturing demand also rose.

China has rarely adjusted its budget mid-year, having previously done so in periods including 2008, in the aftermath of the Sichuan earthquake and in the wake of the Asian financial crisis in the late 1990s.

“Given the funds will continue to be used next year, this means at least in the first half of next year, pro-growth policies will continue to take effect,” Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, wrote in a note “We estimate next year’s macroeconomy will grow at a medium- to high-speed of 5%.”

Meanwhile, Hong Kong property stocks jumped after Sing Tao reported that Hong Kong Chief Executive John Lee will announce cutting home purchase tax to 7.5% from 15% for residents buying a second home.

Benchmark indexes also traded higher in Japan, where shares of semiconductor-equipment company Kokusai Electric Corp opened 15% above initial public offering price. Contracts for US equities slipped after the S&P 500 halted a five-day slide on Tuesday and followed mixed earnings that saw Microsoft Corp climb and Alphabet Inc drop in late US trading.

Baht gains

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

Elsewhere, the Australian dollar extended its gain on higher-than-expected inflation data. Expectations the Reserve Bank of Australia will hike Nov. 7 pushed up the currency and sent the three-year government bond yield as high as 4.28%, a level last seen in 2011.

Rates on two-year Treasury were down five basis points and the dollar was weaker against all of its Group-of-10 peers.

Bank of Japan officials are likely to monitor bond yield movements until the last minute before making a decision on whether to adjust the yield curve control program at a policy meeting next week, according to people familiar with the matter. The yen was little changed Wednesday.

Investors looking to the US earnings season for a dose of good news are hanging their hopes on Big Tech. The five largest companies in the S&P 500 account for about a quarter of the benchmark’s market capitalization. Their earnings were projected to jump 34% from a year earlier on average, according to analyst estimates compiled by Bloomberg Intelligence.

US business activity picked up in October after back-to-back months of stagnation, helped by a rebound in factory demand and an easing in service-sector inflation.

Meanwhile, oil steadied on signs the Israel-Hamas war will remain contained for the time being. Gold edged hi.

Key events this week:

• Germany IFO business climate, Wednesday
• Canada rate decision, Wednesday
• US new home sales, Wednesday
• IBM, Meta earnings, Wednesday
• European Central Bank interest rate decision; President Christine Lagarde holds news conference, Thursday
• US wholesale inventories, GDP, US durable goods, initial jobless claims, pending home sales, Thursday
• Intel, Amazon earnings, Thursday
• China industrial profits, Friday
• Japan Tokyo CPI, Friday
• US PCE deflator, personal spending and income, University of Michigan consumer sentiment, Friday
• Exxon Mobil earnings, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.2% as of 12:11 p.m. Tokyo time. The S&P 500 rose 0.7%
• Nasdaq 100 futures fell 0.3%. The Nasdaq 100 rose 1%
• Japan’s Topix rose 1.3%
• Australia’s S&P/ASX 200 was little changed
• Hong Kong’s Hang Seng rose 2.4%
• The Shanghai Composite rose 0.7%
• Euro Stoxx 50 futures rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.1% to $1.0603
• The Japanese yen was little changed at 149.81 per dollar
• The offshore yuan was little changed at 7.3158 per dollar
• The Australian dollar rose 0.5% to $0.6387

Cryptocurrencies

• Bitcoin rose 1.1% to $34,031.4
• Ether rose 1.1% to $1,792.21

Bonds

• The yield on 10-year Treasuries was little changed at 4.83%
• Japan’s 10-year yield advanced two basis points to 0.860%
• Australia’s 10-year yield advanced five basis points to 4.74%

Commodities

• West Texas Intermediate crude was little changed
• Spot gold rose 0.1% to $1 973.13 an ounce