Asian stocks were boosted by Chinese stocks on Thursday as China’s central bank launched its 500 billion yuan facility to boost capital markets, while the dollar remained near a two-month high ahead of the data on US inflation later today.
The People’s Bank of China (PBOC) said it will begin accepting applications from financial institutions to join a new financing system, a plan announced on September 24 as part of a series of stimulus measures that have driven Chinese stocks on the rise.
China’s CSI300 index rose 1.7% in early trade, a day after falling 7%, as investors remained focused on the details of Chinese authorities’ stimulus measures to help revive the faltering economy.
Hong Kong’s Hang Seng index rose 2.5%, after falling 1.3% on Wednesday, and has gained 24% this year.
MSCI’s index of Asia-Pacific stocks, excluding Japan, rose 0.76% early in the day. Japan’s Nikkei rose 0.5%.
Market attention is now focused on the Finance Ministry’s press conference on Saturday which will provide details of the fiscal stimulus plan.
“It is likely that if and when we have more details on the scale of spending, other policymakers will be better able to begin to put in place supportive policies fit for purpose,” the economists said. ING in a note published Thursday.
“While this may take longer than monetary policy, we continue to expect fiscal stimulus in the coming weeks and months.
Chinese stocks rose to a two-year high on Tuesday following the long National Day holiday, but quickly lost steam as the lack of details on China’s stimulus measures dealt a blow to the stock market. market enthusiasm.
Benchmark indices in China recorded their biggest daily losses on Wednesday since the start of the COVID-19 pandemic.
“The ultimate goal of the Chinese market is not to create sudden rallies. Rather, it is to inject confidence into the economy within the country, in order to alleviate pressure on the market real estate. Their end goal is domestic stability,” said Henry Wu, director of XTrackers Products US.
THE US CONSUMER PRICE INDEX (CPI) IS FALLING
Overnight, the S&P 500 and Dow closed at record highs following the release of Federal Reserve meeting minutes and ahead of September inflation data. [.N]
The minutes showed that a “substantial majority” of Fed officials at the September meeting favored ushering in an era of looser monetary policy with a half-point rate cut. of interest.
However, there was even broader agreement that the initial decision would not commit the Fed to any particular pace of rate cuts in the future, according to the minutes.
Markets are pricing in an 82% chance of a 25 basis point cut next month, according to the CME’s FedWatch tool, as investors lowered their expectations for aggressive rate cuts following the strong report on US employment last week.
Investors will focus on inflation data on Thursday, in the form of the Consumer Price Index (CPI), to get a sense of the Fed’s rate path as the season continues. Corporate profits kick off with bank profits on Friday.
September CPI is expected to show core inflation holding steady at 3.2% year-on-year, according to economists polled by Reuters.
“A higher-than-expected inflation reading would allow yields to extend recent gains and traders to lower expectations of a Fed rate cut in November,” said Tony Sycamore, market analyst at IG.
“This scenario is likely to raise questions about the current Goldilocks scenario and worry stock markets.
Changing expectations for US interest rates boosted the dollar, with the dollar index, which measures the currency against six key rivals, flat after hitting its highest level since August 16 in the night. [FRX/]
The yen reached 149.13 per dollar, while the euro was at 1.09445.
In commodities, oil prices rose as investors grappled with growing tensions in the Middle East and its impact on oil supplies, as well as a spike in demand following a major storm which hit Florida.
Brent crude futures rose 0.4% to $76.86 a barrel, while U.S. West Texas Intermediate (WTI) futures rose 0.37% to $73.5 a barrel. . [O/R]
