By Ankur Banerjee
SINGAPORE (Reuters) – Asian stocks got a lift on Thursday from Chinese stocks as China’s central bank kicked off a 500 billion yuan facility to boost capital markets, while the dollar held close to two-month highs ahead of U.S. inflation data later in the day. .
The People’s Bank of China (PBOC) said it will start accepting applications from financial institutions to join a newly created funding scheme, a plan it announced on September 24 as part of a series of stimulus measures that have pushed Chinese stocks higher.
China’s blue-chip CSI300 index rose 1.7% in early trade, a day after falling 7% as investors remained focused on details of stimulus measures from Chinese authorities to help revive its stuttering economy.
Hong Kong’s Hang Seng rose 2.5%, after falling 1.3% on Wednesday and up 24% this year.
That sent MSCI’s biggest index of Asia-Pacific shares outside Japan 0.76% higher in early Asian hours. Japan’s Nikkei rose 0.5%.
The market’s attention is now on the finance ministry’s press conference on Saturday which will provide details of the fiscal stimulus plan.
“Perhaps if and when we get more details on the scale of spending, other policymakers will be better able to start rolling out supportive policies that match their function,” ING economists said in a note on Thursday.
“While it takes more time compared to monetary policy, we continue to expect a boost in fiscal stimulus in the coming weeks and months.”
Chinese shares rallied to a two-year high on Tuesday after the long National Day holiday but quickly lost steam due to a lack of details on China’s stimulus measures dealing a blow to market sentiment.
China’s benchmark index suffered its biggest daily loss on Wednesday since the start of the COVID-19 pandemic.
“The main goal for the Chinese market is not to make a sudden rally. It’s all about wanting to inject confidence in the domestic economy, to relieve pressure on the real estate market. The final goal is domestic stability,” said Henry Wu, head of XTrackers Products US.
US CPI
Overnight, the S&P 500 and Dow closed at record highs after the release of Federal Reserve meeting minutes and ahead of September inflation data. (.N)
The minutes showed a “substantial majority” of Fed officials at the September meeting supported the start of an era of easier monetary policy with a half-point rate cut.
However, there was broader agreement that the initial move would not commit the Fed to a specific rate cut in the future, the minutes showed.
Markets are pricing in 82% of a 25-basis-point cut ahead of next month, CME’s FedWatch tool shows, with investors reducing expectations for aggressive rate cuts after last week’s strong US jobs report.
Investors’ focus will be on inflation data in the form of the consumer price index (CPI) for insight into the Fed’s rate path, while corporate earnings season kicks off with bank earnings on Friday.
September’s CPI is likely to show core inflation holding steady at a year-on-year clip of 3.2%, according to economists polled by Reuters.
“The hotter-than-expected core inflation numbers will likely drive more recent results and traders may withdraw further expectations of a Fed rate cut in November,” said Tony Sycamore, market analyst at IG.
“A scenario that could call into question the current Goldilocks narrative and the unsettled equity market.”
Expectations of a change in US interest rates have boosted the dollar, with the dollar index, which measures the currency against six major rivals, steady after rising to its highest since August 16 overnight. (FRX/)
If the last take 149.13 per dollar, while the euro is at $1.09445.
In commodities, oil prices were higher as investors grappled with tensions in the Middle East and their impact on oil supplies, as well as increased demand due to a major hurricane in Florida.
Brent crude futures rose 0.4% to $76.86 a barrel, while US West Texas Intermediate (WTI) futures rose 0.37% to $73.5 a barrel. (O/R)
(Reporting by Ankur Banerjee in Singapore; Editing by Muralikumar Anantharaman; To read Reuters Markets and Finance news, click on https://www.reuters.com/finance/markets For Asian stock market conditions, please click: 0 #.INDEXA)
