China Intervention Lifts Shanghai Indexes, Australia Holds Rates Steady

Arjun Pandit
06 Feb, 2024
Mumbai

Markets in Asia lacked direction but retained a downward slide, and investors reacted to domestic earnings and local economic news.

Asian markets looked beyond the rate decisions of major central banks as investors recalibrated global interest rate expectations after Fed Chair Jerome Powell stressed the need for higher interest rates until inflation is on a sustained downward path to 2%.

Bond yields advanced in Asia after Powell's comments tracked the higher yields on the U.S. Treasury notes.

Moreover, the Japanese yen, Indian rupee, Chinese yuan, and Korean won eased against the U.S. dollar.

The Reserve Bank of Australia held its cash rate steady at 4.35% and reiterated its commitment to bring down inflation to its target range of 2% to 3% by 2025.

 

Japan Indexes Fall Tracking Lower U.S. Markets

Market indexes in Japan turned lower after rising in the previous two sessions.

The Nikkei and the Topix indexes declined around 0.5% after the U.S. dollar edged higher, the yield on 10-year U.S. Treasury notes advanced, and Fed Chair Jerome Powell dashed hopes of an imminent rate cut in March.

The Nikkei 225 average declined 0.5% to 36,185.90, and the yen edged lower to 148.15 against the U.S. dollar.

On the economic front, Japan's household spending declined more than expected by 2.5% in December, the tenth monthly decline in a row.

Mitsui Fudosan declined 1.2% to ¥3,861.0 and trimmed gains from the previous session when Elliott Investment Management called for a one trillion yen stock buyback.

Mitsubishi UFJ, Daikin Industries, and Sony Group declined between 1.5% and 3.0%.

 

China Stocks Rebound After Government Intervention

Stocks in Shanghai and Hong Kong advanced after a unit of China's sovereign wealth fund stepped up its stock purchase and the Chinese regulator reiterated its commitment to stabilizing financial markets.

The CSI 300 index gained 3.5% to 3,311.50, and the Hang Seng index advanced 3.7% to 16,079.43.

On Tuesday, Central Huijin Investment, an arm of China's $1.3 trillion sovereign wealth fund, confirmed its purchase of index-based exchange-traded funds.

The sovereign wealth fund's arm also confirmed its plans to make additional purchases but did not elaborate on the amount and timing of these acquisitions.

The China Securities Regulatory Commission also warned investors against market manipulation and devising schemes that benefit from market slumps.

Alibaba Group soared 7.7%, Meituan added 6.6%, Tencent Holdings gained 4.4%, and JD.com increased 2.8%.

Longfor Group advanced 9%, China Resources Land gained 5%, and Sun Hung Kai Properties edged up 0.1%.

 

India Indexes Inch Closer to Record Highs Ahead of Rate Decisions

Stocks in Mumbai traded higher, and benchmark indexes rebounded from losses in the previous session.

The Nifty and the Sensex indexes advanced 0.3% amid strength in large- and mid-cap stocks.

Banks, financial services, energy and power generators and distributors, port operators, and chemical makers were among the leading gainers.

The Reserve Bank of India is expected to hold rates steady for the sixth consecutive time at the end of its policy meeting on Thursday.

The central bank is likely to follow the leads of other central banks and hold rates steady as inflation continues to decline around the world and pandemic-era supply disruptions are ending.

The Sensex index increased 166.67 points to 71,898.19, and the Nifty index gained 74.90 points to 21,846.60.

On the Mumbai stock exchange, 234 stocks traded at their 52-week highs and 27 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds held steady at 7.08%, and the Indian rupee strengthened ₹83.03 against the U.S. dollar.

Bharti Airtel eased 3.3% to ₹1,113.60 after the wireless telecom carrier reported its latest quarterly results.

Consolidated revenue in the December quarter increased 5.8% to ₹37,988.5 crore, and net income soared 54% to ₹2,442 crore from a year ago, respectively.