Asian markets are experiencing an upward trend as investors react positively to newly released economic data from China, which has exceeded expectations, in conjunction with the announcement of a stock buyback initiative from the People’s Bank of China. This upsurge in market performance is also reflected in the ascent of gold to unprecedented levels.
The latest figures from China indicate encouraging growth, particularly in gross domestic product (GDP), industrial production, and retail sales, all of which surpassed market predictions. Following this, an Asian stock index is poised for its first daily increase since the previous week, bolstered by advancements in technology shares, especially from chipmakers. Taiwan Semiconductor Manufacturing Company (TSMC) reported impressive earnings, driving a share price increase of up to 6.3% right after market opening.
The People’s Bank of China’s actions are aimed at reducing financial costs across the economy, which is expected to stimulate corporate and household borrowing and subsequently enhance economic liquidity, as pointed out by Peiqian Liu, an expert in Asia economics at Fidelity International.
In the United States, futures are not showing any major shifts after the S&P 500 index stalled slightly from an all-time high earlier this week. Meanwhile, U.S. Treasury yields stabilized after notable selling pressure was witnessed in the previous trading session. Improvements were noted in both Australian and New Zealand bond yields, which tracked upward movements in U.S. treasury rates.
The dollar index has dipped slightly, reversing a recent upward trend. In currency exchanges, the Japanese yen has appreciated marginally against the U.S. dollar, following an earlier session where it sank beyond the critical threshold of 150 yen per dollar. Recent reports confirmed Japan’s inflation rate at 2.5%, aligning with analysts’ forecasts.
Friday’s data from China indicated a deceleration in the decline of home prices, suggesting that governmental measures aimed at stabilizing the housing market are gaining traction. Investors are now focusing on how the newly introduced relending mechanism will operate, which is set to commence with an interest rate of 1.75% for a duration of one year.
As for the U.S. economy, a lively consumer landscape underscores robust expectations. Recent reports concerning retail sales for September surpassed all projections, showcasing healthy consumer spending as a driving factor for economic growth. This positive trend has led to a recalibration of predictions regarding potential Federal Reserve rate cuts in the remaining quarter of the year.
Economists suggest that the strength of recent economic indicators will likely lead to some pushback within the Federal Reserve against further rate reductions in the upcoming November meetings. However, Federal Reserve Chair Jerome Powell may continue his strategy aimed at steady, measured increases.
In commodities markets, the price of gold has surged to an all-time high, largely due to escalating tensions in the Middle East, while U.S. crude oil prices are also on the rise, hovering around $71 per barrel.
Key market events to observe this week include updates on U.S. housing starts and insights from Federal Reserve officials Christopher Waller and Neel Kashkari.
Notably, the S&P 500 futures exhibit minimal changes, while Japan’s Topix has seen a slight uptick of 0.2%. Conversely, Australia’s S&P/ASX 200 has declined by 0.8%, and Hong Kong’s Hang Seng index gained 0.4%. The Shanghai Composite index recorded a minor decrease of 0.3%.
On the currency front, the dollar index remains relatively stable, and both the euro and the Japanese yen have seen minimal fluctuations against the U.S. dollar.
In cryptocurrency markets, Bitcoin has made gains of 1.4%, currently priced at approximately $67,850.85, with Ether following suit with a similar rise to about $2,634.13.
In the bond markets, yields on 10-year U.S. Treasury bonds remain steady at 4.09%, while Japanese and Australian 10-year yields have increased slightly, a reflection of the broader market sentiment.
Finally, in commodities trading, West Texas Intermediate crude has risen to $70.95 per barrel, and spot gold prices reached $2,706.14 per ounce, underlining the shifting dynamics and opportunities present in the market today.
Stay tuned for the latest updates and analyses as these trends unfold.