September 04, 2023 (MLN): Asian stocks rose as traders bet China’s latest housing stimulus measures will support the economy and data suggested US interest rates could be near a peak, Bloomberg reported.
Hong Kong benchmark indices outperformed the region as investors resumed trading after Friday’s close.
Property stocks continued to rise, with the China property stock index rising above 5% on stimulus measures to strengthen the sector.
Other major indices also rose, sending a regional equity benchmark on track to its highest close since mid-August.
US stock futures stabilized last week after the S&P 500 Index had its best week since June. Expectations that supply cuts by OPEC+ leaders will tighten the market pushed West Texas Intermediate crude up for the eighth straight day, heading for its highest close since November.
Brent also rose and moved towards $90. US markets are closed on Monday for the Labor Day holiday.
The Chinese government said last week it would allow the country’s biggest cities to cut payments for homebuyers and encouraged lenders to lower interest rates on existing mortgages.
The nationwide minimum down payment is uniformly set at 20% for first-time buyers and 30% for second-time buyers. Beijing and Shanghai then lowered mortgage requirements for some homebuyers, while home transactions in China’s biggest cities surged over the weekend.
According to Yi Wang, an analyst at Goldman Sachs Group Inc., the latest actions have the potential to “help restore homebuyer sentiment, ease some interest-paying pressures on households, and pave the way for above-seasonal sales growth in the fourth quarter.” level.”
Sentiment was further buoyed by news that troubled Chinese construction firm Country Garden Holdings Co. received creditor approval to roll over a maturing yuan bond over the weekend. Its shares skyrocketed. However, the developer has only a few days to prevent some dollar bonds from defaulting.
The dollar fell after gaining against major currencies on Friday. There will be no cash Treasury bond trading due to the US holiday.
According to the latest Markets Live Pulse survey, this year’s US stock market rally is strong enough to withstand a further rise in bond yields.
Also, just over 50% of the survey participants expect the positive relationship between stocks and bonds to turn negative by the end of this year and return to the long-term trend of this century.
Friday’s US jobs report showed the job market is undergoing a controlled slowdown, evidenced by solid hiring, slower income growth and more people returning to the workforce.
The moderation gives the Fed leeway to hold rate hikes this month but leaves options open for another rate hike later in the year.
While weaker economic data weighs on government bond yields, Morgan Stanley’s Mike Wilson says market participants appear poised to upgrade valuations again as they expect the late-cycle environment to stretch again.
“With insufficient evidence to support or refute this view, price remains the determining factor in many investors’ conclusions about where we are in the cycle,” he wrote in a note.
“We continue to recommend a more defensive growth stance in the portfolio as growth fears or financial stress could return at any time in a late-cycle environment, particularly early in September.”
Key central bank interest rate decisions are due this week in Australia and Malaysia, with interest rates expected to remain unchanged.
Traders will also be eyeing China’s trade and inflation data due later this week, which is likely to indicate that the economy’s recovery remains fragile, keeping pressure on policymakers to embark on further stimulus measures.
Copyright Metti’s Link News
Posted on: 2023-09-04T09:16:15+05:00
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