Chinese stocks raced toward their best week since 2008 and helped lift Asian shares to 2-1/2-year highs after Beijing rolled out a huge stimulus package to revive the economy, while a sharp fall in oil prices bodes well for disinflation globally.
The Japanese yen fell 1% to three-week lows as markets bet Sanae Takaichi, the economic security minister who opposed interest rate hikes, could win the leadership contest of Japan’s ruling Liberal Democratic Party on Friday.
European sharemarkets are set to open slightly higher, with EUROSTOXX 50 futures adding 0.2% and FTSE futures up 0.1%. Wall Street futures were largely flat.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) gained 0.5%, having hit its highest level since February 2022 earlier in the day. It was headed for a weekly gain of 5.3%, thanks to a huge turnaround in Chinese shares.
China’s blue chips (.CSI300) jumped 3.5%, bringing the weekly rise to 14.6%, the most since November 2008.
Hong Kong’s Hang Seng index (.HSI) also gained 1.9% and was up 11.2% for the week, its best performance since 2009.
“Beijing seems finally determined to roll out its bazooka stimulus in rapid succession. Beijing’s recognition of the severe situation of the economy and lack of success in a piecemeal approach should be valued by markets,” said Ting Lu, chief China economist at Nomura.
“But eventually it is still necessary for Beijing to introduce well thought policies to address many of the deep-rooted problems, particularly regarding how to stabilize the property sector, which is now in its fourth year of contraction.”
As flagged, the People’s Bank of China on Friday lowered banks’ reserve requirement ratio by 50 basis points and cut the 7-day reverse repo rate by 20 bps. It also cut the 14-day reverse repo rate by 20 bps, the second reduction this week.
SOURCE: REUTERS
