Asia Stocks Flat as China Stimulus, Bargain-Buying Lifts Mood

 

Asia’s major markets saw an unspectacular day on Tuesday as bargain-buying cancelled out fears over the global outlook and Europe’s energy crisis.

Japan’s Nikkei share average snapped a four-session losing streak to inch ahead while Hong Kong’s Hang Seng edged back, with China’s markets the outliers clawing back some gains on stimulus hopes as Covid outbreaks continue to impact the world’s No2 economy.

 

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Tokyo’s Nikkei index edged up 0.03% to 27,626.51 after slipping into the negative territory momentarily. The broader Topix inched down 0.11% to 1,926.58.

The index held firm despite losses for European stocks overnight, after the euro dropped below 99 cents for the first time in 20 years and European gas prices surged after Russia said its main gas supply pipeline to Europe would stay shut.

“Japan’s economy is supported by various government measures and stable compared with other countries, which gives a comfort to investors,” said Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities.

China stocks, though, rose after the country’s policymakers pledged to make renewed efforts to boost the Covid-hit economy.

While the yuan also rebounded from a more than two-year low against the US dollar, after the central bank said it will cut the foreign exchange reserves ratio to support the currency.

The Shanghai Composite Index gained 1.36%, or 43.53 points, to 3,243.45, while the Shenzhen Composite Index on China’s second exchange was up 1.21%, or 25.19 points, to 2,113.27.

 

Tencent Drags on Hang Seng

Tech firms listed in Hong Kong lost 0.8%, with gaming and social media giant Tencent down more than 2%, becoming the biggest drag of the Hang Seng benchmark.

Hong Kong-listed mainland developers soared 3.4%, with Country Garden Holdings surging nearly 8% on its easing fall in contracted sales.

The Hang Seng Index dropped 0.12%, or 22.97 points, to 19,202.73.

Other Asian markets also gained on China’s stimulus promise, while investors pinned hope on more clarity ahead of a number of central bank meetings.

Equities in the Philippines rose 0.5% while Indonesian and Malaysia stocks each edged 0.1% higher. 

Indian stocks were flat with Mumbai’s signature Nifty 50 index down 0.06%, or 10.20 points, to close at 17,655.60.

US stocks were set to open higher after Monday’s Labor Day recess, with E-mini futures for the S&P 500 index up 0.31%.

 

European Central Bank Ponders Rate Hikes

The dollar index inched down 0.06% after touching a 20-year peak in the previous session, while MSCI’s gauge of Asia-Pacific stocks outside Japan was up 0.02% at 0532 GMT.

Australia’s S&P/ASX 200 fell 0.36%, after the Reserve Bank of Australia (RBA) increased the cash rate by 50 basis points, as expected.

The European Central Bank will meet on Thursday to discuss interest rate actions. A US Federal Reserve meeting will follow on September 21.

“Soaring inflation will likely see the ECB deliver another outsized rate hike this Thursday,” analysts from the Commonwealth Bank of Australia said.

European energy ministers are set to discuss measures to curb power prices when they hold an emergency meeting on Friday.

“There is a feeling that the next 75 bp hike in September will see a deceleration afterwards,” Sean Darby, the Hong Kong-based global head of equity strategy for Jefferies, said.

Oil prices slipped on Tuesday, paring the previous session’s 3% gain, as a deal among members of the OPEC+ group to cut output by 100,000 barrels per day in October was seen as a largely symbolic move to stem the market’s recent slide.

 

Key figures

Tokyo – Nikkei 225 > UP 0.03% at 27,626.51 (close)

Hong Kong – Hang Seng Index

Shanghai – Composite > UP 1.36% at 3,243.45 (close)

New York – Dow

 

  • Reuters with additional editing by Sean O’Meara

 

 

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Sean O’Meara

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.