China’s Buyback Plans, GDP Fuel Asia Stock Gains: Markets Wrap

(Bloomberg) — Asian equities rose as investors digested China’s better-than-expected economic data and stock buyback program details from the country’s central bank. Gold hit a new record.

Most Read from Bloomberg

Shares in China and Hong Kong extended gains after the People’s Bank of China said it set up a relending mechanism with an initial 300 billion yuan ($42.1 billion) quota for bank loans used in share buybacks. Earlier, data also showed that the nation’s latest gross domestic product, industrial production and retail sales figures beat estimates.

An Asian stocks gauge was on track for its first daily advance since last week, partially fueled by chipmakers’ gains following Taiwan Semiconductor Manufacturing Co.’s robust earnings. Shares of the Taiwanese chipmaker jumped as much as 6.3% in opening trade. Equities in Japan erased earlier gains while those in Australia and South Korea fell.

The PBOC is focusing on “cutting the cost of financing for the real economy so that it can help corporates and households to start leveraging again” and to deliver more liquidity support, Peiqian Liu, Asia economist at Fidelity International, told Bloomberg TV.

US futures were flat after the S&P 500 retreated from an intraday record Thursday to end the session little changed. Treasuries steadied after heavy selling on Thursday, when new signs of vigor in the US economy led traders to trim expectations for rate cuts. Australian and New Zealand yields climbed in Friday trading, tracking the Thursday move in US government debt.

An index of dollar strength inched lower, paring a Thursday advance. The yen was slightly stronger against the greenback after weakening beyond 150 per dollar during the prior session. Headline inflation in Japan rose 2.5% as expected, according to data released Friday.

China’s data release Friday included a showing that the pace of home price decline slowed last month, suggesting that Beijing’s supportive measures are taking effect. Investors also focused on PBOC’s relending mechanism, which comes with a rate of 1.75% for one year maturity, according to the central bank statement.

US Economy

With the US economy humming along, swaps traders further reduced bets on Federal Reserve rate cuts in the remaining two meetings of the year. The shift in forecasts reflected robust US retail sales in September that exceeded expectations, illustrating resilient consumer spending that continues to power the economy.

Story continues

The data followed a blowout jobs report and a hotter-than-estimated consumer inflation print released earlier this month that only reinforced the view the US is nowhere near a recession.

A string of stronger-than-estimated data points sent the US version of Citigroup’s Economic Surprise Index to the highest since April. The gauge measures the difference between actual releases and analyst expectations.

The retail sales data released Thursday “highlight undeniable strength across the economy,” said Ellen Zentner at Morgan Stanley Wealth Management. “Strong data will encourage some pushback from Fed participants to cutting again in November, but Chair Jerome Powell is unlikely to be swayed from forging ahead with steady, quarter-point moves.”

In commodities, gold climbed to a fresh record amid ongoing tensions in the Middle East, while West Texas Intermediate, the US crude price, edged higher to trade around at almost $71 per dollar.

Key events this week:

• US housing starts, Friday

• Fed’s Christopher Waller, Neel Kashkari speak, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 11:08 a.m. Tokyo time

• Japan’s Topix rose 0.2%

• Australia’s S&P/ASX 200 fell 0.8%

• Hong Kong’s Hang Seng rose 0.4%

• The Shanghai Composite fell 0.3%

• Euro Stoxx 50 futures fell 0.1%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0836

• The Japanese yen was little changed at 150.06 per dollar

• The offshore yuan was little changed at 7.1338 per dollar

Cryptocurrencies

• Bitcoin rose 1.4% to $67,850.85

• Ether rose 1.4% to $2,634.13

Bonds

• The yield on 10-year Treasuries was little changed at 4.09%

• Japan’s 10-year yield advanced 1.5 basis points to 0.975%

• Australia’s 10-year yield advanced six basis points to 4.31%

Commodities

• West Texas Intermediate crude rose 0.4% to $70.95 a barrel

• Spot gold rose 0.5% to $2,706.14 an ounce

This story was produced with the assistance of Bloomberg Automation.

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.