Hang Seng and Mainland Stocks Soar on PBoC Stimulus, ASX 200 Declines

US Equity Markets Start the Week Positively

On Monday, September 23, the US equity markets had a positive start to the week. The S&P 500 gained 0.28%, while the Nasdaq Composite Index and the Dow advanced by 0.14% and 0.15%, respectively.

US Services Sector PMI Supports Soft Landing Expectations

On Monday, private sector PMI numbers from the US drew investor interest. Significantly, the all-important US S&P Global Services PMI fell modestly from 55.7 in August to 55.4 in September. Accounting for almost 80% of the US economy, the September PMI supported expectations of a soft US landing, driving demand for riskier assets.

The upbeat numbers from the US likely set the tone for the Tuesday Asian session.

Japan’s Mixed PMIs and Inflation Easing

Private sector PMI numbers from Japan drew interest on Tuesday morning. The Jibun Bank Services PMI increased from 53.7 in August to 53.9 in September. In contrast, the Jibun Bank Manufacturing PMI declined from 49.8 to 49.6 in September.

Notably, input cost inflation eased across the private sector, which may dampen expectations of a Bank of Japan rate hike in Q4 2024.

S&P Global Market Intelligence Analyst Usamah Bhatti commented on the September survey, stating,

“Finally, the rate of input cost inflation eased in September to reach the lowest for six months. Both manufacturing and services firms noted softer cost pressures.”

China Policy Measures Fuel Market Risk Appetite

On Tuesday, the People’s Bank of China (PBoC) reduced the Reserve Requirement Ratio (RRR) by 50 basis points. China’s central bank also lowered lending rates on existing mortgages to bolster China’s real estate market. Furthermore, the PBoC stated that it could take further measures to support the economy.

The policy measures and expectation of further support to reboot the economy supported demand for mainland China and HK-listed stocks.

Hang Seng Index and Mainland China Markets Rally on PBoC Stimulus

The Hang Seng Index rallied 2.40% on Tuesday morning as investors reacted to the PBoC policy measures. Real estate and tech sector stocks led the rally. The Hang Seng Mainland Properties Index (HMPI) and the Hang Seng Tech Index (HSTECH) were up 2.99% and 2.80%, respectively.

Across the tech sector, Alibaba (9988) gained 2.54%, while Baidu (9888) and Tencent (0700) advanced by 1.77% and 1.56%, respectively.

In mainland China, the CSI 300 and the Shanghai Composite gained 1.30% and 1.47%, respectively.

Nikkei Index Advances as USD/JPY Holds Onto 143

The Nikkei 225 advanced by 0.68% on Tuesday morning. A softer Yen supported demand for Nikkei-listed export stocks, with overnight gains on the Nasdaq supporting demand for tech stocks. The USD/JPY rose on Tuesday, increasing by 0.04% to 143.637.

Sony Corp. (6758) rallied 3.22%, while Fast Retailing Co. Ltd. (9983) gained 0.98%. Softbank Group Corp. (9984) advanced 1.49%.

ASX 200 Declines Ahead of the RBA Interest Rate Decision

On Tuesday morning, the ASX 200 Index declined by 0.39%, extending its losses from Monday. Concerns about the RBA rate path impacted demand for ASX 200-listed stocks as the RBA interest rate decision loomed.

Bank stocks dragged the Index into negative territory, with National Australia Bank (NAB) and Westpac Banking Corp. (WBC) sliding by 2.46% and 2.38%, respectively.

However, mining stocks limited the downside as investors reacted to fresh stimulus measures from China. Mining giants Rio Tinto Ltd. (RIO) and BHP Group Ltd. (BHP) rallied 3.46% and 2.34%, respectively.

With the focus on the central banks, investors should remain alert and closely monitor news wires, real-time data, and expert commentary to adjust trading strategies accordingly. Stay informed with our latest news and analysis to manage positions across the Asian equity markets.