Asian Stocks Climb on China Stimulus Hopes Amid Covid Surge

Economists expect Beijing to step in with monetary easing measures to prop up the economy and make sure China hits its 5.5% growth target for this year

 

Asia’s major markets ended the week in positive territory after a tough few days overshadowed by the Federal Reserve’s hawkish tone on rate rises.

After a slow start to trading, the region took its lead from Wall Street, which recovered to end on a positive note, having plunged in earlier sessions as traders fretted over the prospect of higher interest rates.

China stocks closed higher, buoyed by expectations of further policy easing measures to support a slowing economy hit by the country’s worst Covid-19 outbreak in two years.

Economists expect Beijing to take imminent monetary easing measures to prop up the economy and make sure China remains on track to hit its around 5.5% growth target for this year.

 

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“China’s virus prevention and lockdown measures continue to have a negative impact on the economy and the job market, and markets expect the authorities to cut interest rates or take other easing measures as early as next week,” economists at OCBC Wing Hang Bank said in a note.

China’ blue-chip CSI 300 Index rose 0.5% to 4,230.77, while Hong Kong stocks closed on the front foot thanks to a late rally.

The Hang Seng Index added 0.29%, or 63.03 points, to 21,872.01. The Shanghai Composite Index rose 0.47%, or 15.16 points, to 3,251.85, while the Shenzhen Composite Index on China’s second exchange dipped 0.32%, or 6.76 points, to 2,080.77.

Tech giants listed in Hong Kong fell 1.2% on worries over China-US relations, with index heavyweights Alibaba Group, Meituan and Tencent Holdings down between 1.3% and 1.8%.

Real estate developers surged 2.7%, financial firms gained 1.3%, and construction engineering stocks jumped 4.1%. Energy and resources shares added 1.3% and 1.6%, respectively.

 

Tokyo, Sydney, Seoul Advance

Tokyo stocks ended higher as well with the benchmark Nikkei 225 index rising 0.36% or 97.23 points at 26,985.80, while the broader Topix index added 0.21%, or 3.89 points, to 1,896.79.

Sydney, Seoul, Taipei, Manila, Jakarta and Bangkok all rose, while Singapore and Wellington ended lower.

European shares rebounded on Friday but world stocks were still on track for their first weekly loss in four as the prospect of aggressive global rate hikes and geopolitical risks rattled investors.

The MSCI world equity index, which tracks shares in 50 countries, was up 0.2% but for the week was down 1.3% and on track for its first weekly loss in four.

The pan-European STOXX 600 was 1.3% higher as markets in Europe played catch-up with a modest bounce seen on Wall Street on Thursday.

In US bond markets, longer-dated Treasuries have borne the brunt of the this week’s selling as traders see the long-end hit the hardest by the Fed cutting its bond holdings.

The benchmark 10-year yield is up almost 27 bps to 2.6584% this week but was steady in early European trade.

 

Strong Dollar Heaps Pressure on Yen

The US dollar has been the primary beneficiary from rising US yields and the dollar index was higher for the seventh consecutive day and on track for its best week in five.

The stronger dollar has heaped pressure back on the euro and the struggling yen. Japan’s currency was near its lowest level in years and battling with 124.00, while the euro fell to its lowest level since March 7 at $1.0848.

Brent crude futures edged higher after earlier falling below $100 per barrel. US crude oil futures were up 0.8% to $96.76 per barrel.

Gold was little changed at $1,931 but was set to eke out a 0.3% gain for the week.

Major cryptocurrencies posted small gains with bitcoin trading at $43,813, although it was still on track for its second consecutive weekly drop.

 

Key figures around 0720 GMT

Tokyo – Nikkei 225 > UP 0.4% at 26,985.80 (close)
Hong Kong – Hang Seng Index > UP 0.3% at 21,872.01 (close)
Shanghai – Composite > UP 0.5% at 3,251.85 (close)
London – FTSE 100 > UP 0.8% at 7,615.04
Brent North Sea crude > UP 0.9% at $101.48 per barrel
West Texas Intermediate > UP 0.9% at $96.89 per barrel
New York – Dow > UP 0.3% at 34,583.57 (Thursday close)

 

  • Reuters with additional editing by Sean O’Meara

 

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Sean OMeara

Sean O’Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.