Asian equities experienced a rally following gains on Wall Street, driven by a notable shift from large-cap technology stocks to small-cap companies. However, Chinese stocks gave up their earlier advances after a press briefing involving the finance and housing ministers. The CSI 300 index in China turned flat after climbing as much as 1.3%, while a measure of Chinese property stocks continued to decline. China announced plans to expand its support program for “white list” projects to 4 trillion yuan ($562 billion), up from approximately 2.23 trillion yuan already allocated. Meanwhile, Hong Kong stock indices also reduced their gains.
In Australia, share prices rose, whereas Japanese stocks exhibited volatility. US equity futures showed a slight dip after the S&P 500 gained 0.5% on Wednesday. The Russell 2000 index of small-cap stocks hit its highest point in nearly three years, while the Nasdaq 100 lagged behind with a modest increase of just 0.1%.
Attention on China is expected to persist, with key data set for release on Friday, which economists surveyed by Bloomberg anticipate will reveal a 4.5% year-over-year growth for the third quarter. This figure would represent the slowest growth rate in six quarters.
Chinese President Xi Jinping has urged government officials to intensify efforts in the fourth quarter to achieve the country’s annual growth target of around 5%. However, recent press conferences have left investors anxious, as policymakers have provided little in terms of new stimulus measures, raising concerns about the effectiveness of current strategies to bolster growth.
“The challenge is that we don’t have a large enough package to generate excitement,” remarked Jun Bei Liu, portfolio manager at Tribeca Investment Partners, during an interview on Bloomberg Television. “The Chinese economy is at a low point, and to rekindle growth, there needs to be a restoration of confidence,” she added.
In other developments, Australian bond yields rose following a drop in the country’s unemployment rate to 4.1% in September, which was unexpected as economists had predicted it would remain steady. The 10-year Treasury yield inched up to 4%, and the dollar index hovered near its highest level since early August.
The yen strengthened against the US dollar after previously declining, influenced by an unexpected drop in Japanese exports for September.
Market participants are keenly awaiting earnings from Taiwan Semiconductor Manufacturing Co. on Thursday, looking for indications of potential slowing demand for chips. This comes after ASML Holding NV released disappointing order numbers and lowered its revenue forecast for 2025 earlier this week.
The gains in US small-cap stocks on Wednesday signal a shift in investor sentiment, moving away from major tech firms that have thrived amid the artificial intelligence boom, toward sectors that are poised to benefit in stable economic conditions.
“Investors might be looking to transition away from large technology companies, which are broadly held and may lack clear future catalysts,” noted David Russell at TradeStation. “With the upcoming elections and a return to economic balance, we may finally see the long-anticipated rotation from megacaps to other stocks.”
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