Chinese stocks rallied after Beijing pledged to take measures to support the economy, and stocks across the rest of the region broadly followed Wall Street higher after the US Federal Reserve decided to hike interest rates for the first time since to raise in 2018.
Hong Kong’s Hang Seng index rose about 5 percent in morning trade on Thursday, while the CSI 300 index of stocks listed in Shanghai and Shenzhen rose 2 percent. The Hang Seng Tech Index, which was hit earlier in the week by worries about China’s growth prospects, rose 10 percent.
Elsewhere in Asia, Japan’s Topix was up 2 percent, while Australia’s S&P/ASX 200 was up 1.4 percent and South Korea’s Kospi was up 1.6 percent.
The gains followed a rally on Wall Street, where the S&P 500 closed more than 2 percent higher and the tech-heavy Nasdaq Composite gained nearly 4 percent after the Fed hiked interest rates by a quarter of a percentage point.
The rally in Chinese stocks marked the second day of strong gains after China’s Financial Stability and Development Committee promised “substantive measures” to support growth and announced other supportive measures.
“Policymakers are likely to go that route,” said Xiangrong Yu, chief China economist at Citigroup. Yu pointed to statements from a number of top institutions, including the People’s Bank of China and the country’s banking and insurance regulator, all of which pledged to implement the new measures.
But Yu added that there are still “significant headwinds to growth,” including signs of weakness in China’s property market and the current spate of Covid-19 cases that threatens to force authorities to impose sweeping lockdowns could disrupt economic growth.
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“The acceleration in rate hikes is a clear indication that the Fed has regained its anti-inflation mojo and is looking to maintain its credibility in the face of inflationary pressures,” said Kerry Craig, global market strategist at JPMorgan Asset Management. “Right now, the outlook for the US economy is resilient rather than recessionary and able to absorb higher interest rates.”
Global stocks were also buoyed by reports that Ukraine and Russia were making “significant progress” in negotiations on a ceasefire and possible Russian withdrawal. On Thursday, futures markets gave the Euro Stoxx 50 a gain of 0.1 percent, while the S&P 500 was expected to fall 0.1 percent at the open.
Yields were lower in government bond markets after initially spiking in response to the Fed’s move. US 10-year Treasury yields fell 0.04 percentage points to 2.14 after briefly hitting a three-year high during Wednesday’s trading session.
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