Hang Seng Index Rallies on Beijing Stimulus as Mainland Markets Gain Momentum

US Equity Markets Succumb to Profit-Taking

On Wednesday, September 25, the US equity markets had a mixed session as investors awaited fresh cues from the economic calendar. The Nasdaq Composite Index gained 0.04%, while the Dow and S&P 500 declined by 0.70% and 0.19%, respectively.

US Home Sales Slump as August Cooldown Signals Market Shift

On Wednesday, new home sales data drew investor interest. New home sales declined by 4.7% in August after surging by 10.3% in July. Notably, new home sales were up year-on-year. However, rising inventories and weaker sales may adversely affect house price trends.

Shifting the focus to Asia, China’s latest stimulus measures influenced market risk sentiment on Thursday.

Beijing Eyes Massive $142B Bank Stimulus, First Since 2008

On Thursday, FICC Investor CN Wire shared the latest stimulus-related news from Beijing, stating,

“China considers $142 billion capital injection for major banks. Such a move would be the first time since the global financial crisis in 2008 that Beijing has injected capital into its big banks.”

Increased liquidity could enable banks to loosen credit terms to drive domestic demand and business investment. The news fueled demand for Hong Kong and Mainland-listed stocks. Notably a pickup in demand could boost economic activity across the Asian region.

Australian Job Vacancies Decline But Remain Elevated

Job vacancy figures from Australia also drew investor interest on Thursday. According to the ABS, job vacancies fell by 18,000 to 330,000 between May 2024 and August 2024. ABS Head of Labor Statistics noted that job vacancies fell for the ninth consecutive quarter and are now below the May 2022 peak of 473,000. Nevertheless, vacancies remain 45.1% higher than pre-pandemic levels.

AMP Head of Investment Strategy and Chief Economist Shane Oliver commented on the job vacancy numbers, stating,

“Australian job vacancies fell another 5.2%qoq/-17%yoy in the 3 mths to Aug their 9nth consecutive fall. Both public and private vacancies fell. They remain high in absolute terms, and versus unemployment, but the trend is down.”

A continued downward trend in job vacancies may signal a deteriorating Australian labor market, which may raise bets on a Q4 2024 RBA rate cut. An RBA rate cut could drive demand for ASX 200 rate-sensitive stocks.

Hang Seng Index and Mainland China Markets Rally on Fresh Stimulus News

The Hang Seng Index rallied 1.74% on Thursday morning, extending its gains from the previous session as Beijing announced fresh policy measures to support the economy.

The Hang Seng Mainland Properties Index (HMPI) and the Hang Seng Tech Index (HSTECH) surged by 3.73% and 3.15%, respectively.

Notable tech sector movers included Baidu (9888), which jumped by 5.13%, while Alibaba (9988) and Tencent (0700) were up by 4.11% and 2.98%, respectively.

In mainland China, the CSI 300 and the Shanghai Composite advanced by 0.86% and 0.79%, respectively.

Nikkei Index Rallies on USD/JPY Gains and Risk-on Sentiment

The Nikkei 225 advanced by 2.50% on Thursday morning. The USD/JPY rallied 1.07% on Wednesday to 144.750 and extended its gains on Thursday, driving demand for Nikkei-listed stocks. Hopes for fresh policy measures from Beijing to support the Chinese economy contributed to the gains.

Tokyo Electron (8035) and Softbank Group Corp. (9984) rallied 6.96% and 4.04%, respectively. Sony Corp. (6758) advanced by 2.36%.

ASX 200 Advances on Mining and Tech Stock Gains

On Thursday morning, the ASX 200 Index was up 0.78%. Gold, mining, and tech stocks contributed to the gains. The S&P/ASX All Technology Index rallied 1.41%.

Mining stocks Rio Tinto Ltd. (RIO) and BHP Group Ltd. (BHP) advanced by 1.06% and 0.42%, respectively. Iron ore futures trended higher on Wednesday and Thursday, boosting demand for mining stocks. An improving Chinese economy could boost demand for raw materials, including iron ore.

Northern Star Resources Ltd. (NST) gained 1.05% during the morning session, supported by rising spot gold prices.

With the focus on the central banks and stimulus news from Beijing, 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.