Asian stocks defy Wall St sell-off, blamed on China optimism By Reuters

By Rae Wee

SINGAPORE (Reuters) – Asian shares bucked the global trend for an extended rally on Thursday, fueled by lingering optimism over China’s aggressive stimulus package, although there were signs that some of that enthusiasm was starting to wane.

The sea of ​​green in Asian shares came even as Wall Street closed lower overnight, with global stock indexes giving up gains from earlier in the week.

“After such a strong run in recent days, one could argue that the sell-off was largely driven by profit-taking, while others will suggest that it symbolizes the belief that the PBOC’s policy stimulus is by no means a rate-changer game and will fail to succeed. increases consumption in any capacity,” said Chris Weston, head of research at Pepperstone.

However, MSCI’s broadest index of Asia-Pacific shares outside Japan rose more than 1 percent on Thursday to its highest level in two years. increased by 2.4%.

Hong Kong similarly rose 1.5 percent, while the mainland’s blue-chip CSI300 index reversed early losses to last trade 0.3 percent higher.

Also supporting sentiment, Bloomberg News reported Thursday that China is considering injecting up to 1 trillion yuan ($142.39 billion) of capital into its biggest state-owned banks to boost capacity to support the struggling economy.

In the broader market, investors turned their attention to a series of speeches by Federal Reserve policymakers later in the day, including remarks from Chairman Jerome Powell, which could provide further clues on the outlook for US rates.

The release of the core price index for personal consumption expenditures (PCE) – the Fed’s preferred measure of inflation – will also take place on Friday.

“I don’t think the reaction will be excessive, but the direction will be there,” said Jeff Ng, head of Asia macro strategy at SMBC, referring to Friday’s data release. “Assuming prices are sticky, then maybe that will dampen expectations a little bit for a 50 basis point rate cut.”

Markets are now pricing in about a 62% chance of a 50bp cut at the Fed’s November policy meeting and will see a total of 77bp cuts by the end of the year.

Shifting expectations about how aggressively the Fed would cut interest rates this year and next have in turn kept the dollar largely in range over the past month.

It was back on top on Thursday, after falling earlier in the week, as China’s numerous support measures boosted risk appetite and sent traders snapping up China-linked assets such as the Australian and New Zealand dollars.

Analysts said the greenback also drew additional support from month-end flows.

It was last 0.18% higher at $0.6835, while it was down 0.06% at $0.6257.

Against the dollar, the euro and sterling retreated from recent peaks to last trade at $1.1137 and $1.3324 respectively.

The value rose 0.06% to 7.0277 per dollar, briefly strengthening above the key psychological level of 7 per dollar in the previous session.

“While rate cuts should weigh on the RMB, this may be offset by equity inflows,” DBS analysts said in a note.

“However, China’s economic outlook remains fragile, and sustained RMB gains are only acceptable if regional currencies continue to appreciate against the USD.”

In commodities, oil prices rose 0.27% to $73.66 per barrel. rose 0.2 percent to $69.82 a barrel. (OR)

was steady at $2,659.56 an ounce after hitting a record high on Wednesday. (EMPTY/)