Hong Kong’s Hang Seng index saw a more than 6% increase on Wednesday, buoyed by optimism surrounding Beijing’s stimulus policies. Property developers such as China Vanke, Logan Group, and Longfor Group led the gains. Chinese tech giants like Baidu, JD.com, Alibaba, Tencent, and Xiaomi also experienced significant increases. Mainland China markets were closed for the Golden Week holiday, following a strong rally on Monday after Beijing announced various stimulus measures including interest-rate cuts and liquidity injections.
In other parts of the Asia-Pacific region, markets were mixed. Australia’s S&P/ASX 200 was trading flat, while South Korea’s Kospi fell slightly. Japan’s Nikkei 225 and Topix index both experienced declines. The new Japanese Prime Minister Shigeru Ishiba took office after being elected as head of the ruling Liberal Democratic Party, succeeding Prime Minister Fumio Kishida. Ishiba’s appointment could impact the Bank of Japan’s interest rate decisions, with some analysts suggesting the potential for rate hikes under his leadership.
Traders in Asia were analyzing data on consumer inflation from South Korea, which showed a rise of 1.6% in September, lower than economists’ expectations. A survey released by S&P Global indicated that South Korea’s factory activity contracted at its fastest pace in 15 months in September due to a slowdown in overseas demand. These developments could impact economic prospects in the region and shape future policy decisions.
Overnight in the U.S., the Dow Jones Industrial Average and S&P 500 fell, along with the Nasdaq Composite, amid rising tensions in the Middle East. Oil prices and the CBOE Volatility Index jumped after Iran fired ballistic missiles at Israel, prompting a retaliatory ground operation by Israel. Economist Stephen Roach warned of potential upside risks to oil prices and inflation due to the conflict and suggested that the Federal Reserve may need to reassess its monetary policy stance.
Looking ahead, U.S. investors are anticipating the September jobs report, which will be released on Friday. August’s job creation figures were slightly lower than expected, signaling a slowing labor market. Roach cautioned that a combination of regional conflict in the Middle East and rising unemployment in the U.S. could lead to significant market volatility. These factors may influence the Fed’s decisions regarding monetary policy moving forward.
