Equities in China and Hong Kong were standout gainers on Monday after Beijing’s latest measures to tackle its property crisis. Stocks elsewhere in Asia declined with Japan’s benchmark plummeting.
The CSI 300 index was headed for a technical bull market, and both iron ore and Chinese developer stocks surged after three major cities eased rules on housing purchases. A slump in Japanese stocks contributed to a decline in the MSCI Asia Pacific gauge after the victory of Shigeru Ishiba in the Japanese ruling party’s leadership race wrong-footed investors.
China’s “government does seem more intent on following through on measures to get the economy firing again, so it does feel slightly more promising than previous attempts,” said Matthew Haupt, a portfolio manager at Wilson Asset Management. “So the rally might have some more legs than previous times and we will be waiting for more announcements to get more conviction around the trajectory of the Chinese economy and stock market.”
Investors are heading into the final quarter as the global economic outlook improves following China’s stimulus measures and as central banks from Indonesia to Europe and the US begin cutting interest rates to support growth.
The Federal Reserve’s preferred measure of underlying US inflation and household spending rose modestly in August, underscoring a cooling economy. Treasury yields and the dollar were little changed on Monday, with investors anticipating the Fed would stay on track for more rate cuts in the coming months.
In Japan, Ishiba’s new administration will pursue continuity in economic, monetary and foreign policy, with the role of finance minister going to Katsunobu Kato, a former government spokesman, according to local media.
The yen pared the previous session’s gains, while hopes for Chinese stimulus lifted both the Australian and New Zealand dollar.
“While the turnaround is impressive, largely driven by Beijing’s latest stimulus efforts, I’m not entirely convinced the rally is built on solid foundations,” said Billy Leung, an investment strategist at Global X Management in Sydney. “This feels more like a short-term reaction than a reflection of deeper structural improvements.”
Tensions in the Middle East were at risk of escalating once again, however, after Israel killed Hezbollah’s leader, Hassan Nasrallah, in Beirut.
Oil was steady on Monday, with the market waiting to see how Iran will respond.
This week, traders will pay close attention to Eurozone inflation and manufacturing activity data due before the US jobs report on Friday that will help assess the outlook for Federal Reserve rate cuts into year-end.
Source: https://finance.yahoo.com/news/japan-stocks-poised-fall-rate-224912045.html
