Asian stocks extended their gains, driven by a rise in risk appetite across global financial markets. This positive momentum was supported by China’s latest stimulus measures and an optimistic outlook from the US. In Australia and Hong Kong, equities moved higher, while China’s CSI 300 Index approached its strongest weekly gain since 2008, bolstered by government commitments to enhance fiscal support and stabilise the property sector to stimulate growth. The upbeat sentiment also drew from favourable US economic data released overnight, while Japan’s Nikkei index appeared set to recover from the losses it experienced after the Bank of Japan’s interest rate hike in July.
The world’s two largest economies—China and the US—have played significant roles in boosting market confidence this week. China lowered the amount of cash banks are required to hold in reserve, just ahead of a long holiday. Meanwhile, the Federal Reserve’s key inflation indicator and a report on consumer demand are both scheduled for release, offering further clues about the direction of US interest rates.
Elias Haddad, a strategist at Brown Brothers Harriman, noted that the combination of increased stimulus measures from China and expectations of aggressive easing from the Federal Reserve, while the US economy remains strong, is encouraging for risk assets. He also highlighted how this environment is putting pressure on the US dollar, particularly against currencies more sensitive to economic growth.
On Friday, the dollar saw a slight increase, while yields on 10-year US Treasury bonds remained steady. In Japan, the yen weakened as the country prepared for a leadership election, with one of the leading candidates opposing interest rate hikes. Additionally, inflation in Tokyo showed signs of easing this month after Prime Minister Fumio Kishida reinstated energy subsidies to help offset the costs for households, particularly following one of the hottest summers on record.
Earlier this week, the People’s Bank of China launched one of the most significant policy campaigns seen in decades. This bold stimulus effort from Beijing was designed to strengthen a slowing economy and restore investor confidence.
In Hong Kong, shares of New World Development surged as much as 17% on Friday, marking the most significant rise since May 2009. The stock had been suspended after the company’s CEO announced his resignation, but trading resumed strongly once the suspension was lifted.
In the US, revised data revealed that the economy performed better than initially anticipated, driven by strong consumer demand supported by healthy income growth. The labour market also showed resilience, with a decrease in jobless claims. However, those hoping for more specific economic forecasts from Federal Reserve Chair Jerome Powell were left wanting, as his commentary on Thursday did not offer fresh insights into future monetary policy.
US stock futures showed signs of softening early Friday, following the S&P 500’s 42nd record closing of the year. Micron Technology Inc. played a key role in boosting US stock indexes on Thursday, as its strong forecast, supported by AI demand, fuelled market optimism. However, the announcement of a US Justice Department investigation into Super Micro Computer Inc., another company benefiting from the AI boom, led to a dip in its shares.
In commodity markets, oil prices continued to fall as reports suggested that Saudi Arabia would increase output in December. Meanwhile, Libya appointed a new central bank governor, which could pave the way for a recovery in some of the country’s crude production. Copper prices rallied, climbing back above $10,000 per ton, iron ore surpassed the $100 mark, and gold hit another record high on Thursday.
Fidelity Asian Values Plc (LON:FAS) provides shareholders with a differentiated equity exposure to Asian Markets. Asia is the world’s fastest-growing economic region and the trust looks to capitalise on this by finding good businesses, run by good people and buying them at a good price.
