Asia shares rebound sharply on China policy pledges
Passersby walk past an electric board displaying Japan’s Nikkei share average outside a brokerage in Tokyo, Japan April 18, 2023. REUTERS/Issei Kato/File photo
SINGAPORE – Asian shares jumped and the yuan rose on Tuesday as investors cheered China’s pledge to step up support for its sputtering economy, with the heaviest buying in Hong Kong’s beaten-down property sector while the dollar dipped against key rivals.
MSCI’s broadest index of Asia-Pacific shares outside Japan snapped a six-day losing streak with a 1.5-percent gain. Japan’s Nikkei fell 0.4 percent.
In China, the Shanghai Composite Index rose 1.9 percent and the Hang Seng leapt 3 percent with property stocks that had been diving on debt repayment worries bouncing back.
Country Garden jumped 14 percent and was the top-traded stock in Hong Kong while its onshore-traded debt recovered to slightly less distressed levels. Shares in its services arm and rival Longfor rose by more than 20 percent.
China’s top leaders pledged on Monday to step up help for the economy amid a tortuous post-COVID recovery and signaled there would be more to come for the property industry.
“Perhaps the biggest move was the pledge to ‘adjust and optimize property policies,’ which opens the door for further property easing,” said Citi analysts.
“The Chinese economy could muddle through the second half amid such a policy setting.”
An index of mainland developers jumped 11 percent on Tuesday and was headed for its best day in eight months.
In the currency market, the Chinese yuan strengthened about 0.5 percent to 7.1526 per dollar, helped by state banks selling dollars onshore and offshore early in Asia.
The move set the tone across other pairs and the dollar index, which measures the U.S. currency against six major rivals, eased 0.1 percent to 101.31.
The China-sensitive Australian dollar rose 0.4 percent to $0.6767. The kiwi added 0.2 percent to $0.6215.
A big session of earnings lies ahead, along with the release of the euro zone bank lending survey on Tuesday before the Federal Reserve takes center stage on Wednesday.
Unilever, LVMH and EssilorLuxottica report in London and Paris.
Microsoft, Google parent Alphabet, Visa, General Electric, chipmaker Texas Instruments are among the heavyweights in the U.S.
Markets anticipate 25-basis-point rate hikes from both the Fed and the European Central Bank this week but beyond that pricing diverges from policymakers’ rhetoric, meaning a great deal of focus will fall on their tone and outlook.
The euro scraped off a two-week low hit overnight after a survey showed European business activity shrank much more than expected in July, reigniting recession worries. It last bought $1.1070.
The Japanese yen added 0.07 percent to 141.39 per dollar and investors seem in two minds over whether the Bank of Japan, which sets policy on Friday, might tweak its stance on pinning government bond yields near zero.
In the energy market, U.S. crude rose 0.3 percent to $78.98 per barrel and Brent was at $82.96, also up 0.3 percent on the day.
Spot gold added 0.3 percent to $1,961 an ounce.
U.S. wheat futures hit a five-month high on Tuesday, stretching gains following Russia’s attacks on Ukrainian ports and grain infrastructure that sparked concerns about long-term global supplies and food security.
