Asian Stock Market: China leads bulls amid stimulus hopes

Asian equities outpace S&P 500 Futures, ignore downbeat yields.
China rescues state-owned firms, US Senators eye infrastructure spending passage.
Sluggish economics, virus woes challenge monetary policy tightening.
US PMI, central bankers and NFP are the key events of the week.

Anil Panchal FXStreet

Markets in Asia-Pacific kick-start August on a positive note even as activity numbers from China raise concerns over the region’s economic growth. The reason could be traced from the hopes of further relief packages from China and the US.

Amid these plays, MCSI’s index of Asia-Pacific shares outside Japan gains 0.55% whereas Japan’s Nikkei 225 rise over 2.0% by the press time.

Having extended covid-led emergency to Osaka and three other prefectures, Japanese authorities are also mulling more financial help to the nationals while holding the Olympics.

On the other hand, China battles the slowest pace of expansion in official PMI and a weaker-than-expected Caixin Manufacturing PMI amid the latest Delta covid variant fears. While the same challenges the global powerhouse, Nikkei said, “China and its regional governments have created funds to help state-owned companies guard against defaults, readying 210 billion yuan ($32.5 billion) to alleviate financing constraints.” The same fuelled Beijing-backed stocks to consolidate the heavy losses, initially piled on due to the government’s crackdown on the IT and education sector.

While gains in Chinese shares propelled Australia and New Zealand counterparts, due to their trade proximity to Beijing, a bit easies covid figures from Canberra also favored shares traders in the Oz nations.

Furthermore, US policymakers have finally put President Joe Biden’s infrastructure spending bill on the Senate’s floor for a debate and the Democrats are optimistic to get it through the House during this week.

It’s worth mentioning that the world’s largest pension fund’s, from Japan, record cut in US bonds and Chinese woes weigh on the Treasury yields of the US and Chinese government securities. Though, S&P 500 Futures gain half percent by the press time.

Moving on, stocks in Indonesia benefit from upbeat inflation data whereas those from South Korea ignore softer activity numbers for July. Additionally, India’s BSE Sensex also follows the suit even as the recent covid numbers from New Delhi have been too volatile.

To sum up, market sentiment is positive of late but key statistics and monetary policy meetings by the BOE and the RBA, followed by the US jobs report, will be crucial to follow.

Read: S&P 500 Futures gain half a percent as US Senators discuss infrastructure spending

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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