Stocks rebound as China factory data boosts sentiment: Markets shake up

(Bloomberg) – Stocks and currencies rallied in Asia, led by a more than 3% gain in Hong Kong’s benchmark index, as China’s manufacturing sector posted its biggest improvement in more than a decade.

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An Asian equity benchmark has risen the most since mid-January, while futures for the S&P 500, Nasdaq 100 and Euro Stoxx 50 edged up after a report showing the world’s second-biggest economy is recovering after Covid restrictions were lifted bounced back, all made losses.

Commodity currencies rose, with the Australian dollar recovering from a loss while the offshore yuan gained more than 0.6%. Oil also rose along with gold.

China’s Manufacturing PMI climbed last month to its highest level since April 2012, while another indicator also improved. The data was released ahead of the country’s annual National People’s Congress, with traders expecting to learn more about Beijing’s economic plans.

“China is currently in a relatively good position relative to other major economies in terms of the easing cycle,” Elizabeth Kwik, abrdn’s Asian equities investment director, told Bloomberg Television. Any growth stimulus signals from the government “will be some good that could come from the NPC,” she said, referring to Congress.

Wednesday’s rebound marks a reversal from recent weeks, when a re-rating of US interest rates led investors to sell almost all risk assets. The Hang Seng China Enterprises Index rose nearly 4%, helped by technology and real estate stocks, recovering after a more than 11% loss in February.

The latest data “should keep the yuan on firm footing,” while “commodity currencies like the Australian dollar could also benefit from expectations of a solid recovery in Chinese demand,” said Wei Liang Chang, strategist at DBS Bank AG

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An indicator of dollar strength fell and government bond yields rose slightly. Australian and New Zealand government bond yields fell.

Bond yields rose in Europe on Tuesday after hot inflation data prompted a reassessment of interest rate expectations, picking up a theme that has dominated trading in a month in which the Federal Reserve signaled its intent to hike rates more than the market expected .

Bond traders no longer see the odds of a Fed rate cut this year as better than right now, a shift from what they were expecting just a month ago. Market expectations also assume the European Central Bank will hike rates through February 2024, fully pricing in a 4% ECB final rate.

Important events this week:

• Eurozone S&P Global Eurozone Manufacturing PMI, Wednesday

• US Construction Spending, ISM Manufacturing, Light Vehicle Sales, Wednesday

• Eurozone CPI, Unemployment, Thursday

• US initial jobless claims, Thursday

• Eurozone S&P Global Eurozone Services PMI, PPI, Friday

Some of the key movements in the markets:

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• S&P 500 futures were little changed as of 2:08 p.m. Tokyo time. The S&P 500 fell 0.3%

• Nasdaq 100 futures were little changed. The Nasdaq 100 fell 0.1%

• Japan Topix Index up 0.1%

• Hong Kong’s Hang Seng index rose 3.3%

• China’s Shanghai Composite Index up 0.9%

• Australia’s S&P/ASX 200 Index was little changed

currencies

• The Bloomberg Dollar Spot Index fell 0.1%

• The euro rose 0.1% to $1.0591

• The Japanese yen fell 0.2% to 136.41 per dollar

• The offshore yuan rose 0.5% to 6.9183 per dollar

cryptocurrencies

• Bitcoin surged 2.7% to $23,777.69

• Ether is up 3.2% to $1,657.44

Bind

raw materials

• West Texas Intermediate crude was up 0.6% to $77.49 a barrel

• Spot gold rose 0.2% to $1,830.38 an ounce

This story was created with the support of Bloomberg Automation.

–Assisted by Charlie Zhu, Wenjin Lv and Akshay Chinchalkar.

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