Chinese equities experienced a downturn on Wednesday, while commodities faced significant losses as investor optimism regarding a potential economic recovery in China waned. In contrast, broader markets showed signs of stability, buoyed by hopes that the U.S. economy can sidestep recession and sustain global demand.
The New Zealand dollar dipped by 0.6% following the central bank’s decision to cut interest rates by 50 basis points, coupled with a cautious economic outlook that suggests the possibility of further rate reductions.
In Asia, MSCI’s broadest index of shares outside Japan rose by 0.6%, with Hong Kong stocks rebounding approximately 2% after experiencing their most significant decline since 2008 the previous day.
On Tuesday, Hong Kong markets plummeted, leading to a decline in mainland shares and a sell-off in commodities ranging from oil to metals. This downturn followed a news conference from China’s National Development and Reform Commission (NDRC) that failed to announce any substantial new stimulus measures. The Shanghai Composite and the blue-chip CSI 300 both dropped around 3% on Wednesday.
Brent crude futures, which fell 4.6% overnight, stabilized at $77.79 per barrel. Iron ore prices found some support at $106 in Singapore after a 5% decline on Tuesday.
Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho, commented, “The disappointment, while understandable, appears premature and misguided. The fact is, it is not the NDRC’s role to provide specifics on fiscal stimulus or a further monetary policy push.”
In Japan, the Nikkei index rose by 1%, buoyed by a surge in shares of convenience store chain Seven & I Holdings, following reports from Bloomberg News that Canadian retailer Alimentation Couche-Tard intends to increase its buyout offer.
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