Chinese stocks rally; Markets Await US Inflation: Markets Wrap Up

(Bloomberg) — Chinese stocks jumped after details of the stimulus package were released as investors focused on U.S. inflation data, which will shape the Federal Reserve's policy easing plan.

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Asian equities rose across the board on Thursday, with a benchmark of mainland Chinese shares recovering some of the previous day's losses. European and US futures were slightly lower. Treasuries were flat, while oil gained as traders eyed an Israeli response to an Iranian missile attack. The Bloomberg Dollar Spot Index and the Euro were little changed.

While the promise of new policy stimulus has given Chinese markets a shot at late September, the sum expressed concerns will not be enough to spark a blistering rally in mainland shares on Wednesday. US inflation data on Thursday will provide more details on the Fed's policy path, while investors in China will look to a Finance Ministry news conference on Saturday for clues on its fiscal stimulus.

“After a few days of more profit-taking, we expect the offshore market to move into the second phase of the rally, with slower gains, higher volatility but the fundamentals – earnings and valuation – coming back into focus,” said Richard Tang, China strategist and research at Julius Baer Group Ltd. Main Hong Kong.

Louisa Fok, China equity strategist at Bank of Singapore, said the two trillion yuan ($283 billion) stimulus “is now becoming the consensus,” with perhaps half of it going to local governments. If most of the residue goes to use, it will be positive for the market, he said.

Read: Hedge funds sell record Chinese stocks on Tuesday, Goldman says

Elsewhere, Taiwan Semiconductor Manufacturing Co. reported a better-than-expected 39% rise in quarterly revenue on Wednesday. Markets in Taiwan are closed on Thursday. Indian shares gained even as quantitative strategists at Bernstein downgraded their equity rating from neutral to underweight.

US consumer price data is expected to show more subdued inflation, supporting the Fed's expected easing next month. But given the surprisingly strong job growth for September reported last Friday, the gradual slowdown in price pressures suggests policymakers will opt to cut interest rates when they meet next month.

Fed Chair Jerome Powell said estimates issued by officials alongside their September rate decision are pointing to a quarter-point rate cut at the final two meetings of the year.

In France, Prime Minister Michel Bernier's government will present budget details to its cabinet on Thursday evening in Paris. It is expected to be an initial course of shock therapy to tackle the bloated deficit, aimed at reassuring skeptical bond investors and navigating strong opposition in a fractured parliament.

In commodities, crude prices rose after two days of declines, with Brent trading near $77 a barrel. Markets are on edge over Israel's intention to launch retaliatory strikes against Tehran, raising fears of all-out war. Iran has warned that it is ready to launch thousands of missiles if necessary.

President Joe Biden discouraged attacks on Iran's oil infrastructure and spoke with Israeli Prime Minister Benjamin Netanyahu on Wednesday for the first time in more than a month.

This week's highlights:

• US CPI, preliminary jobless claims, Thursday

• The Fed's John Williams and Thomas Barkin spoke Thursday

• JPMorgan, Wells Fargo kicked off the earnings season for the big Wall Street banks on Friday

• US PPI, University of Michigan Consumer Sentiment, Friday

• The Fed's Laurie Logan, Austen Goolsby and Michelle Bowman speak, Friday

Some of the main rice in the market:

stock

• S&P 500 futures were little changed at 6:56 a.m. London time

• Nikkei 225 futures (OSE) rose 0.3%

• Japan's Topix rose 0.2%

• Hong Kong's Hang Seng rose 3.4%

• The Shanghai Composite rose 2.2%

• Euro Stoxx 50 futures were little changed

currency

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0940

• The Japanese yen was little changed at 149.23 per dollar

• The offshore yuan rose 0.2% to 7.0751 per dollar

• The Australian dollar rose 0.2% to $0.6732

• The British pound was unchanged at $1.3071

Cryptocurrency

• Bitcoin rose 0.8% to $60,870.27

• Ether rose 2% to $2,400.82

bond

• The yield on 10-year Treasuries was little changed at 4.07%

• Japan's 10-year yield advanced 2.5 basis points to 0.955%.

• Australia's 10-year yield rose three basis points to 4.22%

merchandise

• West Texas Intermediate crude rose 0.8% to $73.80 a barrel

• Spot gold rose 0.2% to $2,613.05 an ounce

This story was produced with the help of Bloomberg Automation.

— with assistance from Abhishek Bishnoi and Masaki Kondo.

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