(Bloomberg) — Asian stocks rose as investors digested better-than-expected Chinese economic data and details of an additional share buyback program from the Chinese central bank.
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Stocks in China and Hong Kong extended gains after the People’s Bank of China said it had established a re-lending mechanism with an initial quota of 300 billion yuan ($42.1 billion) for bank loans used in share buybacks. Earlier, the data also showed that the country’s latest GDP, industrial production and retail sales figures exceeded estimates.
The Asian stock index was on track for its first daily advance since last week, driven in part by gains for chipmakers following strong earnings at Taiwan Semiconductor Manufacturing Co. Shares of the Taiwanese chipmaker jumped as much as 6.3% in the opening session. Stocks in Japan also rose, supported by a weaker yen.
Peqian Liu, an Asia economist at Fidelity International, told Bloomberg TV that the People’s Bank of China is focusing on “lowering the cost of financing the real economy so that it can help businesses and households start to borrow again” and providing more liquidity support.
US futures were flat after the S&P 500 index fell from a record level during the day, Thursday, to end the session little changed. Treasuries stabilized after heavy selling on Thursday, when new signs of activity in the US economy prompted traders to lower their expectations for an interest rate cut.
The dollar strength index rose for the fourth session to a level not seen since early August. Australian and New Zealand bond yields rose in early trading on Friday, tracking the moves.
Elsewhere in Asia, Japan’s headline inflation rate rose 2.5% as expected. The yen was somewhat stronger after surpassing the psychological level of 150 for the dollar on Thursday, bringing the risk of official intervention back into focus.
Data released by China on Friday showed a slowdown in the pace of house price declines last month, indicating that Beijing’s supportive measures are beginning to take effect. Investors also focused on the People’s Bank of China’s re-lending mechanism, which comes with a one-year rate of 1.75%, according to the central bank’s statement.
American economy
As the US economy continues to move, swap traders have reduced bets on Fed rate cuts at the remaining two meetings of the year. The shift in outlook reflects strong US retail sales in September that beat expectations, demonstrating resilience in consumer spending that continues to drive the economy.
The data came on the heels of a strong jobs report and consumer inflation statement released earlier this month that reinforced the view that the United States is not close to a recession.
A series of stronger-than-expected data points sent the US version of Citigroup’s economic surprises index to its highest level since April. The metric measures the difference between actual releases and analysts’ expectations.
Thursday’s retail sales data “highlights undeniable strength across the economy,” said Ellen Zentner of Morgan Stanley Wealth Management. “Strong data will encourage some pushback from Fed participants to cut rates again in November, but Chairman Jerome Powell is unlikely to be swayed from moving forward with steady quarter-point moves.”
In commodities, gold rose to a new record high amid ongoing tensions in the Middle East, while the price of West Texas Intermediate crude rose, trading at around $71 to the dollar.
Main events this week:
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Chinese GDP, Friday
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Housing starts in the US on Friday
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The Fed’s Christopher Waller and Neel Kashkari speak on Friday
Some key movements in the markets:
Stocks
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S&P 500 futures were little changed as of 11:08 a.m. Tokyo time
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Japan’s Topix index rose 0.2%.
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Australia’s S&P/ASX 200 index fell 0.8%.
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The Hang Seng Index in Hong Kong rose 0.4%.
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Shanghai Composite Index fell 0.3%
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Euro Stoxx 50 futures fell 0.1%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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There was little change in the euro at $1.0836
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There was little change in the Japanese yen at 150.06 to the dollar
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There was little change in the yuan in external transactions at 7.1338 to the dollar
Cryptocurrencies
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Bitcoin rose 1.4% to $67,850.85
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Ethereum rose 1.4% to $2,634.13
Bonds
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The yield on 10-year Treasury bonds was little changed at 4.09%.
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The yield on 10-year Japanese bonds rose 1.5 basis points to 0.975%.
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The yield on Australian 10-year bonds rose by 6 basis points to 4.31%.
Goods
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West Texas Intermediate crude rose 0.4% to $70.95 a barrel
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Spot gold rose 0.5 percent to $2,706.14 an ounce
This story was produced with assistance from Bloomberg Automation.
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