Asian Stocks Rise, Chinese Shares Reverse Gains: Markets Wrap

By Investor Empires On Oct 17, 2024

(Bloomberg) — Stocks rose in Asia after Wall Street closed higher, helped by a shift from giant technology to smaller companies. Chinese stocks erased their gains after a press conference by the finance and housing ministers.

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China’s CSI 300 index turned flat after rising 1.3% earlier. A measure of Chinese real estate stocks extended losses. China said it would expand a program to support “whitelist” projects to 4 trillion yuan ($562 billion) from about 2.23 trillion yuan already deployed. Hong Kong stock indices also pared gains.

Australian stocks rose, while Japanese stocks fluctuated. US stock futures fell after the S&P 500 rose 0.5% on Wednesday. The Russell 2000 small-cap index rose to its highest level in nearly three years, while the Nasdaq 100 lagged, rising just 0.1%.

The focus on China is set to remain, with data due on Friday expected to show the economy expanded 4.5% in the third quarter from a year ago, according to economists surveyed by Bloomberg. This would mark his weakest pace in six quarters.

Chinese President Xi Jinping called on government officials to make every effort in the fourth quarter to help the country achieve its annual growth target of about 5%. However, after a series of press conferences this month in which policymakers provided no details of the new stimulus, concerns are now growing that the efforts may not be enough to revive growth.

“The challenge now is that we don’t have a big enough package to get people excited,” Jun-Pei Liu, a portfolio manager at Tribeca Investment Partners, told Bloomberg TV. “Right now, the Chinese economy is sitting at the bottom – but to reignite growth, they really need to reignite confidence,” she said.

Elsewhere, Australian bond yields rose after the country’s unemployment rate fell to 4.1% in September. Economists polled by Bloomberg expected it to remain steady. The 10-year Treasury yield rose 4%, and the dollar index remained near its highest levels since early August.

The yen strengthened after falling against the dollar in the previous session, as Japanese exports suffered a surprise decline in September.

Taiwan Semiconductor Manufacturing Co.’s earnings will be closely watched on Thursday for any signs of slowing chip demand, after ASML Holding NV posted surprisingly tough order numbers and cut its 2025 revenue forecast earlier in the week.

Gains for U.S. small companies on Wednesday indicated that investors are shifting from the world’s largest technology companies that have soared on the back of the artificial intelligence boom to other stocks that are benefiting from benign economic conditions.

“Investors may be looking to move away from large technology companies, which are widely owned and may have fewer clear catalysts going forward,” said David Russell of TradeStation. “As the election approaches and the economy returns to balance, the long-awaited shift away from giant corporations to everything else may finally be within reach.”

US profits

Traders also continued to delve into a raft of US corporate earnings. Morgan Stanley rose 6.5% as traders and bankers joined the rest of their Wall Street rivals in reporting better-than-expected revenue, leading to a 32% jump in profits in the third quarter. United Airlines Holdings Inc. shares jumped. by 12% with earnings beating estimates.

The S&P 500 has already hit 46 closing records this year, and according to the trading desk at Goldman Sachs Group Inc., that rally is poised to extend into the final months of 2024.

Scott Rubner, managing director of global markets and a tactical specialist at the bank, estimates that the US stock index could end the year “well north of 6,000.” According to his calculations of data going back to 1928, the historical average for the S&P 500 returns from October 15 to December 31 is 5.17%. In election years, average returns are slightly higher, at just over 7%, meaning a level of 6,270 at the end of the year.

“The stock market sell-off has been canceled out, and the year-end rally is beginning to resonate as clients shift from left-tail to right-tail hedging as institutional investors are forced into the market for the time being,” Rubner wrote in an article. Note to customers Tuesday. He added that professional investors are increasingly concerned about the material underperformance of their benchmarks.

In commodities, West Texas Intermediate crude rose after falling for a fourth day on Wednesday. Gold rose for the third day. Bitcoin was little changed on Thursday after rising 1.7% to touch the highest level since July on Wednesday.

Main events this week:

European Central Bank interest rate decision, Thursday
US Retail Sales, Unemployment Claims, Industrial Production, Thursday
Fed Governor Austin Goolsbee speaks on Thursday
Chinese GDP, Friday
Housing starts in the US on Friday
The Fed’s Christopher Waller and Neel Kashkari speak on Friday

Some key movements in the markets:

Stocks

S&P 500 futures were down 0.2% as of 11:52 a.m. Tokyo time.
Nasdaq 100 futures fell 0.2%
There was little change in the Japanese Topix index
Australia’s S&P/ASX 200 rose 0.6%.
The Hang Seng Index in Hong Kong rose 0.9%.
The Shanghai Composite Index was little changed
Euro Stoxx 50 futures fell 0.1%

Currencies

The Bloomberg Dollar Spot Index was little changed
There was little change in the euro at $1.0861
The Japanese yen rose 0.2 percent to 149.33 yen to the dollar
There was little change in the yuan in external transactions at 7.1323 to the dollar

Cryptocurrencies

Bitcoin fell 0.2% to $67,451.84
Ethereum rose 0.2% to $2,622.44

Bonds

Goods

West Texas Intermediate crude rose 0.2% to $70.56 a barrel
Spot gold rose 0.3 percent to $2,682.08 per ounce

This story was produced with assistance from Bloomberg Automation.

–With assistance from Abhishek Vishnoi.