Hang Seng Index Soars on PBoC Policy Moves, Mainland Property and Tech Stocks Surge

US Equity Markets Advance on Soft Landing Bets

On Thursday, September 26, the US equity markets had a positive session as investors responded to upbeat US data. The Nasdaq Composite Index and the Dow advanced by 0.60% and 0.62%, respectively, while the S&P 500 gained 0.40%.

US Jobless Claims Fuel Soft Landing Hopes

US initial jobless claims unexpectedly fell from 222k (week ending September 14) to 218k (week ending September 21). Tighter labor market conditions could support wage growth and consumer confidence, possibly boosting consumer spending. Private consumption accounts for over 60% of the US economy.

While supporting expectations of a soft landing, the labor data slightly reduced bets on a 50-basis point Fed rate cut. According to the CME FedWatch Tool, the probability of a 50-basis point November Fed rate cut fell from 57.4% (Wednesday) to 51.0% (Thursday).

Tokyo Inflation Weakens BoJ Rate Hike Expectations

On Friday, September 27, inflation figures for Tokyo impacted investor bets on a Q4 2024 Bank of Japan (BoJ) rate hike. Tokyo’s Consumer Price Index, excluding food and energy, increased by 1.2% year-on-year in September, mirroring August’s rate. Significantly, underlying inflation remained well below the BoJ’s 2% target, reducing bets on a Q4 2024 rate hike.

Falling bets on a BoJ rate hike drove USD/JPY demand. The USD/JPY advanced by 0.21% to 145.107 on Friday morning, boosting buyer appetite for Nikkei-listed stocks.

Investors Ignore Weak Chinese Industrial Profits

China’s industrial profits increased by 0.5% year-to-date. Industrial profits dropped significantly from July’s 3.6%. However, investors brushed aside the numbers as the People’s Bank of China and Politburo rolled out policy measures to bolster the economy.

On Friday, the People’s Bank of China cut the 14-day reverse repo rate from 1.85% to 1.65%, signaling further policy support to China’s banks.

Bloomberg TV Asia Pacific Chief Markets Editor David Ingles commented on the Mainland China equity markets, stating,

“The last time China’s CSI 300 had a +12% week was 16 years ago. A lot of pent up energy was released into the equity market this week.”

Hang Seng Index and Mainland China Markets Surge

On Friday, the Hang Seng Index rallied 2.34% as investors responded positively to further PBoC policy measures to support China’s economy.

The Hang Seng Mainland Properties Index (HMPI) and the Hang Seng Tech Index (HSTECH) surged by 3.13% and 3.62%, respectively.

Notable tech stock movers included Baidu (9888), which rallied by 3.34%, while Alibaba (9988) jumped by 3.63%. Tencent (0700) advanced by 1.17%.

On mainland China, the CSI 300 rose by 2.00%, while the Shanghai Composite gained 0.99%.

Nikkei Index Finds Softer Yen Support

The Nikkei 225 gained 0.15% on Friday morning, benefiting from a softer Japanese Yen. Among the gainers, Tokyo Electron (8035) advanced by 4.15%, while Nissan Motor Corp. (7201) gained 1.15%.

ASX 200 Climbs on Mining Stocks

On Friday morning, the ASX 200 Index was up 0.11%. Mining stocks countered falling gold, oil, and banking sectors.

Mining giants BHP Group Ltd. (BHP) and Rio Tinto (Ltd) saw gains of 3.09% and 3.31%, respectively, while Fortescue Metals Group (FMG) surged 4.33%. Policy measures from China fueled a rebound in spot iron ore prices, driving demand for mining stocks. Effective policy measures from China could signal a bullish near-term outlook for iron ore and mining stocks.

With the focus remaining on the central banks and stimulus news from Beijing, investors should stay alert and closely monitor news wires, real-time data, and expert commentary to adjust trading strategies accordingly. Stay informed with our latest news and analysis to manage positions across the Asian equity markets.