Stimulus and China fire up Asian stocks

China’s growth lifts Asian equities

With Pelosi and Mnuchin still talking over the weekend, US equity futures had a strong start to after-market trading this morning. All three major indices futures rising over 0.50%. Another set of impressive Chinese data has also lifted spirits and combined, has lifted Asian equity markets to a strong start to the week.

China’s data has started the week on a positive note, despite being a mixed bag. GDP underperformed slightly, rising 4.90% YoY for Q3, with GDP growth increasing 2.70% QoQ for Q3. Industrial Production outperformed, rising 6.90% YoY for September versus 5.80% expected; but Retail Sales took center stage. Retail Sales climbed by 3.30% YoY for September, much higher than the street’s consensus of 1.80%. China’s GDP growth has become the envy of the rest of the world. At the same time, industrial production and retail sales continue to confirm China’s rapid economic recovery and its role as the engine of post-Covid growth.

The Nikkei 225 has risen 1.10% despite underwhelming Japan data, with the Kospi up 0.80%. Mainland China equities have shrugged off new export restriction laws, focussing instead on the China data releases. The Shanghai Composite and CSI 300 have risen 0.50%, with the Hang Seng up 0.80%, with Ant Financial’s IPO approval apparently imminent.

Singapore and Malaysian markets have risen 0.60%, with Jakarta up 0.40% and Taiwan 1.05% higher. The eternal optimists down-under have been further boosted by hopes of an RBA rate cut in November and the easing of Covid-19 restrictions in New South Wales and Victoria. Australia’s All Ordinaries and ASX 200 climbing 1.0% today.

We expect equity markets to maintain their positive tone in Asia, although Europe, with its own risks very much to the fore, will be more sanguine. Looking ahead, increasing event risk, notably in US markets, looks like it will be ignored entirely. Wall Street is betting the house on some sort of US stimulus package. Depending on how the moving parts of the week play out, this week could denote “peak-FOMO” for equity markets for a while.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was OANDA’s Senior Market Analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV and Channel News Asia as well as in leading print publications such as The New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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