Asian equities experienced a notable upswing on Tuesday, driven primarily by significant gains in Chinese markets following the announcement of various economic support measures by the central bank.
In Hong Kong, shares surged by 2%, while U.S. futures dipped slightly amid rising oil prices.
The People’s Bank of China (PBOC) unveiled a range of strategies aimed at revitalizing the struggling property sector. Governor Pan Gongsheng revealed plans to reduce the reserve requirement ratio for banks by 0.5 percentage points, with further cuts anticipated. This measure is expected to enhance liquidity and facilitate increased lending.
Additionally, regulators are set to introduce new policies designed to foster stable growth in the stock market, according to Pan and other senior officials during a press conference in Beijing.
Julian Evans-Pritchard from Capital Economics commented that the coordinated approach, as opposed to incremental support measures, represents “a step in the right direction.” However, he cautioned that without more substantial fiscal backing, these efforts might fall short of generating a significant economic turnaround.
The Hang Seng Index in Hong Kong soared over 400 points, closing at 18,604.26, while the Shanghai Composite Index rose by 0.9% to 2,772.58.
In Japan, the Nikkei 225 climbed 0.7% to reach 37,974.98, while South Korea’s Kospi remained relatively stable at 2,602.30. Conversely, Australia’s S&P/ASX 200 dipped 0.3%, settling at 8,126.30.
On Wall Street, the S&P 500 advanced by 0.3% to 5,718.57, surpassing its previous record from Thursday. The Dow Jones Industrial Average inched up 0.1%, closing at an all-time high of 42,124.65, while the Nasdaq Composite gained 0.1%, finishing at 17,974.27.
Tesla led the market, experiencing a robust 4.9% increase, fully recovering from significant losses earlier in the year when it had dropped as much as 42% in April due to price cuts aimed at stimulating sluggish sales.
This positive momentum helped offset a sharp 10.3% decline for Trump Media & Technology Group, which reached its lowest value since its debut on the Nasdaq in March. The firm, linked to former President Donald Trump’s Truth Social network, has faced six consecutive days of losses amid speculation regarding potential share sales by Trump and other insiders now that they are no longer under a “lock-up” agreement. Trump has asserted that he has no intention of selling.
On the economic front, a report released Monday indicated that U.S. business activity is growing at a slower pace than anticipated, primarily due to ongoing challenges in the manufacturing sector. The preliminary data from S&P Global indicated a more pronounced contraction in manufacturing for September compared to August, marking a 15-month low. This sector has been particularly affected by rising interest rates.
Several forthcoming economic reports are expected to shed light on the current state of the U.S. economy, including a final revision of growth figures from the spring on Thursday and consumer spending data on Friday. Reports concerning employment have taken precedence for Wall Street, which now views a potential slowdown in the job market as a significant concern, contrasting the previous focus on inflation.
As inflation has considerably decreased since its peak two summers ago, the Federal Reserve has adjusted its approach. The central bank feels less compelled to maintain high interest rates to temper the economy and is increasingly pressured to support job market stability and overall economic health. This shift was evident in last week’s decision to lower the main interest rate by half a percentage point, with further cuts planned for this year and next.
In the bond market, the yield on the 10-year Treasury note remained stable at 3.74%, consistent with late Friday’s figures. The yield on the two-year Treasury, which is more sensitive to anticipated Fed actions, decreased slightly to 3.58% from 3.60% late Friday.
In commodity markets, U.S. benchmark crude oil prices rose by 44 cents to $70.81 per barrel, while Brent crude increased by 41 cents, reaching $73.62 per barrel.
In currency trading, the U.S. dollar strengthened against the Japanese yen, rising to 143.65 from 143.61. Meanwhile, the euro experienced a slight decline, falling to $1.1106 from $1.1113.
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