Asian Stocks Gain on China Stimulus Hopes: Markets Wrap

(Bloomberg) — Asian stocks rose on expectations that China may deliver more stimulus to revive the world’s second-largest economy after the US kicked off its easing cycle. Gold touched a record high.

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The MSCI Asia Pacific Index climbed as shares in China, Hong Kong and South Korea advanced. US equity futures also gained. China announced plans for a rare briefing on the economy Tuesday by three top financial regulators just as it cut one of its short-term policy rates, fueling speculation that fresh stimulus is on the way.

Traders are looking for another round of measures to resuscitate China’s growth and energize the global economy. While a raft of Chinese data on Friday added to the dour picture, US statistics due later this week are likely to provide investors fresh insight about the pace and scope of further Federal Reserve easing.

“Having a bit more policy support definitely does help” Chinese share markets, said Ken Wong, an Asian equity portfolio specialist at Eastspring Investments Hong Kong Ltd. “Ultimately, getting the consumer to spend and building up that confidence is going to be key in China.”

The yen dropped after Bank of Japan Governor Kazuo Ueda indicated Friday that authorities aren’t in a hurry to raise interest rates again. Cash trading of US Treasuries was closed in Asia due to a holiday in Japan.

A gauge of the dollar was little changed while Australian bonds fell ahead of the central bank likely extending a policy pause on Tuesday as housing costs underpin sticky inflation.

Elsewhere this week, the central banks of Sweden and Switzerland are scheduled to hold monetary policy decisions while a swath of Fed speakers — including regional presidents Raphael Bostic and Austan Goolsbee — are due to speak. The Fed’s preferred price metric and data on US personal spending and income are also set to be released.

Fed Governor Christopher Waller said on Friday he’d likely back quarter-point cuts at each of the next two central bank policy meetings in November and December.

“What markets will probably be looking for here is a very fine balance in the data — where disinflation continues unfettered whereas jobs don’t deteriorate too sharply,” Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd., told Bloomberg TV.

Oil rose after a second weekly gain, with the focus on an escalation in the conflict between Israel and Hezbollah. Worsening strife in the Middle East could spur more price gains in gold due to its haven status.

Meanwhile, the US Commerce Department is said to be planning to reveal proposed rules that would ban Chinese- and Russian-made hardware and software for connected vehicles as soon as Monday. Meanwhile, Sri Lanka’s dollar bonds slid as leftist candidate Anura Kumara Dissanayake’s victory at the presidential election put the nation’s bailout by the International Monetary Fund and debt deals at risk.

Over in Europe, French Prime Minister Michel Barnier said his new government could increase taxes for big business and the wealthiest as it seeks to repair runaway budget deficits and keep the faith of bond markets. Olaf Scholz’s Social Democrats held off the far-right Alternative for Germany and look set to cling on to power in the eastern state of Brandenburg, sparing the chancellor and his party another embarrassing electoral setback.

Key events this week:

Malaysia CPI, Monday
Eurozone HCOB Manufacturing PMI, HCOB Services PMI, Monday
UK S&P Global Manufacturing PMI, S&P Global Services PMI, Monday
Australia rate decision, Tuesday
Japan Jibun Bank Manufacturing PMI, Services PMI, Tuesday
Mexico CPI, Tuesday
Bank of Canada Governor Tiff Macklem speaks, Tuesday
Australia CPI, Wednesday
China medium-term lending facility rate, Wednesday
Sweden rate decision, Wednesday
Switzerland rate decision, Thursday
ECB President Christine Lagarde speaks, Thursday
US jobless claims, durable goods, revised GDP, Thursday
Fed Chair Jerome Powell gives pre-recorded remarks to the 10th annual US Treasury Market Conference, Thursday
Mexico rate decision, Thursday
Japan Tokyo CPI, Friday
China industrial profits, Friday
Eurozone consumer confidence, Friday
US PCE, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.1% as of 9:04 a.m. Tokyo time
Hang Seng futures fell 0.5%
Australia’s S&P/ASX 200 fell 0.4%
Euro Stoxx 50 futures fell 1.4%

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.1160
The Japanese yen fell 0.2% to 144.11 per dollar
The offshore yuan was little changed at 7.0464 per dollar

Cryptocurrencies

Bitcoin rose 0.4% to $63,461.17
Ether rose 0.2% to $2,578.54

Bonds

Commodities

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Anand Krishnamoorthy.