Hong Kong: SHARES rose mostly in Asia on Monday following another rally on Wall Street fueled by optimism for the global economy as inflation slows and China reopens to the world.
After last year’s crash of soaring prices and central bank rate hikes, the mood on the trading floor is much calmer as recession fears recede and stocks are supported by bargain buying.
China is expected to report its worst annual growth rate since 1976 outside of a pandemic-ravaged 2020 this week, but a coronavirus-free ride and pledges to boost key sectors could lead to 2023 growth. is expected to see a strong recovery.
Signs that the government is giving the tech sector a light hand after a lengthy crackdown have also boosted confidence, giving market giants such as Alibaba and Tencent greater power.
HSBC’s Frederic Neumann said China is likely to emerge from nearly three years of stringent containment measures to boost the global economy.
“As the world’s second-largest economy, China’s acceleration in household and investment spending will help support global trade at a time of weak demand in the West,” he said.
The positive outlook helped Asian markets in early trading on Monday.
Hong Kong is one of the biggest risers, down about 10% year-to-date, but Shanghai, Sydney, Seoul, Singapore, Taipei, Manila, Wellington and Jakarta are also up.
However, Tokyo fell as the strong yen weighed on exporters.
Japan’s units have eased in recent months after Fed rate hikes are expected to slow and the Bank of Japan signaled a turnaround from years of ultra-accommodative monetary policy. It has grown exponentially over the course of the week.
Expectations that the Fed will raise interest rates by just a quarter of a percentage point at its next meeting have pushed the dollar lower against other major currencies including the pound and the euro.
Last week’s data showing US inflation at its lowest level since October 2021 boosted stocks and lowered recession bets in the world’s top economy.
The improvement in sentiment was underscored by the news that the US consumer confidence index hit a 12-month high in December, helped by lower gasoline prices.
There is also growing optimism that the worst-case scenario of a hard landing for the economy due to rising borrowing costs will not occur.
Stephen Innes of SPI Asset Management said: “The resumption of economic activity in China and lower natural gas prices have forced the market to revise up its pessimistic growth outlook for this year.
“Fears of a peak recession could end sooner or later, and economic activity could pick up again in the second half of the year, just as major central banks have stopped raising rates.”
Key figures around 0230 GMT
Tokyo – Nikkei 225: up 1.0% to 25,855.38 (break)
Hong Kong – Hang Seng Index: 21,874.64, up 0.6%
Shanghai – Overall: up 1.2% at 3.232.12
EUR/USD: Rising to US$1.0867 from US$1.0834 on Friday
USD/JPY: fell from 127.87 yen to 127.70 yen
GBP/USD: Rise from US$1.2235 to US$1.2276
EUR/GBP: rose to 88.54p from 88.52p
West Texas Intermediate: down 0.3% to $79.66 a barrel
North Sea Brent crude: down 0.3% to $85.05 a barrel
New York – Dow: 34,302.61 (close), up 0.3%
London – FTSE 100: up 0.6% at 7,844.07 (close) – AFP