Asian Stocks Edge Up as Beijing Leaves Markets in Suspense
Investors Await Beijing’s Actions in the Stock Market
Asian stocks firmed on Wednesday as investors waited to see if Beijing’s increasingly frantic efforts to prop up its sagging share markets would actually work. Bonds also enjoyed a reprieve from recent selling.
China’s Regulators Announce Further Curbs on Short Selling
In recent days, China’s regulators have announced further curbs on short selling and state investors said they were expanding their stock buying plans.
President Xi Jinping’s Meeting with Financial Regulators
Bloomberg News also reported President Xi Jinping would discuss the stock market with financial regulators, though there was no confirmation this had happened or what was discussed.
Effectiveness of Beijing’s Efforts Still Uncertain
The jury is very much out on how effective all this will prove, and the blue chip index inched up 0.4% in choppy early trade, while Shanghai stocks added 0.9%.
Market Uncertainty and Optimism
“Markets have shown that their bar to turning more optimistic around the economy has been high,” said Galvin Chia, an emerging markets strategist at NatWest. “There is also considerable uncertainty around what the government’s longer-term approach is towards markets.”
Positive Movement in Asia-Pacific Shares
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.4% to a five-week top, helped by a 0.8% rise in South Korea.
Movement in US Stocks and Earnings Reports
Dipped 0.1% as tech stocks dragged, though Toyota Motor (NYSE:) jumped on strong earnings. EUROSTOXX 50 futures and both added 0.1%. Companies reporting earnings on Wednesday include Uber (NYSE:), Walt Disney (NYSE:) and PayPal (NASDAQ:).
Concerns in the Banking Sector
The banking sector remained a concern as Moody’s downgraded New York Community Bancorp (NYSE:) to junk citing pressure on its funding and liquidity. The stock lost 22% on Tuesday, to be down 60% since it reported surprise losses last week.
Updates on Federal Reserve Speakers and Rate Cuts
The timing of U.S. rate cuts was no clearer after Federal Reserve Presidents Loretta Mester and Neel Kashkari welcomed the progress on inflation but signaled there was more work to do before policy could be eased.
Market Speculation and Treasury Movement
Fed fund futures still found buyers on Tuesday after two sessions of sharp falls, and the market essentially added 8 basis points of cuts back in for 2024. Treasuries also bounced as a sale of three-year paper drew solid demand, and 10-year yields dipped to 4.086% from Monday’s top of 4.177%.
Market Movement and Impact on Currencies
The drop in yields took some steam out of the U.S. dollar, which eased to 147.85 yen and away from the recent 10-week peak of 148.90. The euro has had its own troubles with a string of soft economic data at home and was flat at $1.0757, some distance from last week’s top of $1.0897.
Oil Prices and U.S. Energy Department Assessment
Oil prices found support from a U.S. Energy Department assessment that U.S. output would grow by only 170,000 barrels per day (bpd) this year, instead of a previously forecasted pace of 290,000 bpd. WTI rose 18 cents to $78.77 a barrel, while Brent edged up 21 cents to $73.52 per barrel.
