Asian stocks rally on US inflation slowdown and robust China data
Asian markets experienced a significant upswing following a US government report suggesting a slowdown in inflation, which may signal a pause in the Federal Reserve’s series of aggressive interest rate hikes. This optimistic outlook was bolstered by strong retail and industrial figures from China, easing concerns over the country’s economic recovery.
On Tuesday, the Hang Seng Index surged 2.2% to reach its best two-week gain at 17,784.30, driven by gains in banks such as HSBC (LON:HSBA), up by 0.6%, and developers like Sun Hung Kai Properties with an increase of 3%. The Tech Index also saw a notable rise of 2.5%.
The positive trend continued into Wednesday, with the Hang Seng Index extending its monthly gains to 4%, despite nearly a 10% drop earlier in the year. This rebound was supported by impressive performances from major tech firms Tencent (HK:0700) and JD (NASDAQ:JD).com, which saw their stocks rise ahead of their quarterly earnings reports. Alibaba (NYSE: BABA) Group’s shares rallied by 4.3%, and Meituan advanced by 3.4%. Additionally, Trip.com’s stock jumped by 3.6%.
China’s retail sales outperformed expectations, jumping by 7.6%, while industrial output grew by 4.6%, according to the National Bureau of Statistics data. These figures suggest a more robust economic health than previously anticipated.
In response to these developments, other Asian stock markets also advanced; Japan’s Nikkei 225 increased by 1.8%, South Korea’s Kospi climbed by 2%, and Australia’s S&P/ASX 200 rose by 1.5%. The Shanghai Composite Index added a modest gain of 0.5%.
To support liquidity, China’s central bank injected a substantial amount of 1.45 trillion yuan into the banking system through a mid-term lending facility, equivalent to roughly $200 billion.
Investors have welcomed these signs of easing inflationary pressures and renewed vigor in the Chinese economy, which could lead to a more stable global financial environment in the coming months.