Hang Seng Index Rallies as Mainland China Stimulus Fuels Risk Appetite

US Equity Markets Continue to Climb

On Tuesday, September 24, the US equity markets extended their gains from Monday’s session. The Nasdaq Composite Index advanced by 0.56%, while the Dow and S&P 500 gained 0.20% and 0.25%, respectively.

US Consumer Confidence Slides in September

On Tuesday, the CB Consumer Confidence Index dropped from 105.6 in August to 98.7 in September. Concerns about the US labor market sent the Index below 100. Moreover, a drop below 100 could suggest that consumers may curb spending, possibly impacting the US economy.

However, investors brushed aside the weaker-than-expected numbers. Expectations of multiple Q4 2024 Fed rate cuts and Tuesday’s stimulus measures from China drove demand for riskier assets.

Aussie Headline Inflation Enters Target Range

On Wednesday, inflation figures from Australia fueled speculation about a Q4 2024 RBA rate cut. The Monthly CPI Indicator slid from 3.5% in July to 2.7% in August, entering the RBA’s 2-3% target range. However, the figures had a limited impact on the ASX 200, as the RBA had already signaled a temporary easing of inflation pressures on Tuesday.

Expert Views on the Aussie Inflation Report

AMP Head of Investment Strategy and Chief Economist Shane Oliver commented on the Australian inflation report, stating,

“Aust Aug inflation fell to 2.7%yoy from 3.5% with rebates pushing electricity -14.6%mom & fuel -3.1%mom. The RBA will look thru this as temporary & focus on the underlying trend. But even here the news is good with trimmed mean inflation slowing to 3.4%. Rate cuts getting closer!”

While the RBA may discount the August inflation figures, softer inflation trends would boost bets on a Q4 RBA rate cut, driving demand for rate-sensitive ASX-listed stocks.

Hang Seng Index and Mainland China Markets Extend Rallies on Stimulus

The Hang Seng Index advanced by 1.91% on Wednesday morning, extending its gains from Tuesday, as stimulus measures fueled the appetite for riskier assets. On Wednesday, the People’s Bank of China conducted a 300 billion Yuan Medium-Term Lending Facility (MLF) operation, cutting the 1-year interest rate by 30 basis points to 2.0%.

Gains in the real estate and tech sectors contributed to the rally. The Hang Seng Mainland Properties Index (HMPI) and the Hang Seng Tech Index (HSTECH) saw morning gains of 1.47% and 1.95%, respectively.

Across the tech sector, Baidu (9888) and Tencent (0700) saw gains of 1.57% and 2.00%, respectively, while Alibaba (9988) advanced by 0.33%.

In mainland China, the CSI 300 and the Shanghai Composite rallied 2.21% and 1.81%, respectively.

Nikkei Index Trends Higher on Market Risk Sentiment

The Nikkei 225 rose by 0.34% on Wednesday morning. Risk-on sentiment and a steady USD/JPY drove demand for Nikkei-listed stocks. The USD/JPY increased by 0.10% to 143.368.

Among the notable movers, Nissan Motor Corp. (7201) rallied 2.06%, while Sony Corp. (6758) gained 0.51%. Tokyo Electron (8035) was up 0.44%.

ASX 200 Supported by Mining Stocks

On Wednesday morning, the ASX 200 Index advanced by 0.07%. Hopes of the People’s Bank of China policy measures bolstering the Chinese economy drove demand for iron ore spot and mining stocks.

Mining giants Rio Tinto Ltd. (RIO) and BHP Group Ltd. (BHP) saw gains of 3.35% and 3.21%, respectively, while Fortescue Metals Group (FMG) surged by 6.14%. Iron ore spot jumped 7.12% on Tuesday and extended its gains on Wednesday morning.

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.