Tue. Sep 26th, 2023
    Asian Stocks Rise as Traders Bet on China’s Stimulus Measures and US Interest Rate Outlook

    Asian stocks saw gains as traders expressed confidence in China’s latest property stimulus measures and speculated that US interest rates may be nearing their peak. After a closure on Friday, Hong Kong benchmark indexes outperformed the region as investors resumed trading. Real estate stocks experienced an extended advance, with China’s property shares gauge rising above 5% thanks to measures taken to bolster the sector.

    Other major indexes in the region also saw gains, putting a regional equity benchmark on track for its highest close since mid-August. Meanwhile, futures for US equities remained steady, following the S&P 500 Index’s best week since June. The expectation of supply cuts by OPEC+ leaders tightening the market pushed West Texas Intermediate crude to its eighth straight day of advance and on track for its highest close since November. Brent also rose, moving towards $90. However, US markets were closed on Monday for the Labor Day holiday.

    Last week, the Chinese government announced measures to stimulate the property market, including allowing major cities to cut down payments for home buyers and urging lenders to lower rates on existing mortgages. These measures have boosted sentiment among homebuyers, leading to a surge in home transactions in China’s largest cities over the weekend. Analysts from Goldman Sachs Group Inc. believe that these measures have the potential to restore homebuyers’ sentiment and alleviate household interest payment pressure, leading to an improvement in sales in the fourth quarter.

    The positive sentiment on China’s property market was further strengthened by news that distressed builder Country Garden Holdings Co. received approval from creditors to extend a maturing yuan bond. On the other hand, the US dollar ticked lower after gaining against major peers on Friday, but with no trading of cash Treasuries due to the US holiday.

    In terms of US stock market performance, the latest Markets Live Pulse survey indicates that the current rally is strong enough to withstand higher bond yields. Additionally, over 50% of survey respondents believe that the positive relationship between equities and bonds will turn negative by the end of this year, aligning with the long-term trend.

    Looking ahead, central banks in Australia and Malaysia are scheduled to announce their rate decisions this week, with rates expected to remain unchanged. Traders will also be closely monitoring China’s trade and inflation data, which are set to be released later this week. This data will likely indicate that the Chinese economy’s recovery remains fragile, putting pressure on policymakers to implement further stimulus measures.

    – Bloomberg
    – Goldman Sachs Group Inc.
    – Markets Live Pulse survey
    – Morgan Stanley