- China real estate stocks rally in political support
- Euro targets 5-month high, dollar nearly 3-month low against yen
- Oil prices bounce off China hopes, talk of production cuts
SYDNEY, Nov 29 (Reuters) – Asian stocks rallied on Tuesday as Beijing’s latest move to prop up developers boosted the property sector and rumors swirled that recent public unrest could lead to an earlier easing in market conditions. restrictions related to COVID-19.
Speculation has been fueled by reports that Chinese health authorities will hold a press conference later on Tuesday to discuss coronavirus control measures.
“The news from the 3:00 p.m. (07:00 GMT) press conference is out, and I think it got the market excited about the possibility that we could see China continue to relax,” said Khoon Goh, head of the Asia research at ANZ.
“The yuan rallied, and Chinese stocks and everything else in Asia reacted positively to that.”
Shares of Chinese real estate companies certainly surged after the country’s securities regulator lifted a ban on equity refinancing for listed real estate companies. Read more
That helped Chinese blue chips (.CSI300) jump nearly 3%, in the biggest one-day rally in a month and a marked reversal from Monday’s steep falls. Read more
MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) followed with gains of 1.8%, while Hong Kong’s Hang Seng (.HSI) soared 3.9%.
The sudden surge of optimism about China has combined with talk of possible OPEC+ production cuts to help lift oil prices.
U.S. crude futures rebounded $1.24 to $78.48 a barrel, after hitting a year low overnight, while Brent rose $1.64 to 88, $83.
Not all markets seemed confident the rally would last. The Japanese Nikkei (.N225) fell 0.5%.
EUROSTOXX 50 futures were flat and FTSE futures were up 0.1%.
S&P 500 futures rose 0.2% and Nasdaq futures rose 0.4%.
Underlining the far-reaching impact of Beijing’s policies, shares of Apple Inc (AAPL.O) fell 2.6% on reports that COVID-19 restrictions would lead to a huge shortfall in unit production iPhone Pro. Read more
“China’s zero COVID policy has been an absolute blow to Apple’s supply chain,” said Wedbush analyst Daniel Ives.
“We estimate that Apple now has significant iPhone shortages that could take off around at least 5% of units in the quarter and potentially up to 10% depending on the next few weeks in China around production and prices. Foxconn protests.”
Richmond Federal Reserve Chairman Thomas Barkin has become the latest official to quell speculation that the U.S. central bank will reverse interest rates relatively quickly next year.
That heightened tensions ahead of Fed Chairman Jerome Powell’s speech on Wednesday, which is shaping up to be a major messaging event as markets yearn for a pivot on policy.
Analysts suspect they may be disappointed.
“We’re looking at it essentially confirming a slower pace of upside at the December meeting, which is almost fully priced in,” said NatWest Markets analyst Jan Nevruzi. “But we also think he will repeat that the Fed intends to remain in restrictive territory until next year.”
“October’s CPI slowdown was good news, but it’s still not a complete victory, as growth and labor market data are still strong,” he added. “
The Fed isn’t alone in being hawkish, with European Central Bank President Christine Lagarde warning that eurozone inflation hasn’t peaked and could go even higher. Read more
Inflation figures from Germany and Spain are due later on Tuesday, ahead of Wednesday’s main eurozone report.
Competing comments on the policy helped volatile currency trading, with the euro hitting $1.0377, after hitting a five-month high of $1.0497 overnight before falling back.
The dollar plunged to 138.65 yen, after briefly hitting a three-month low at 137.50 overnight. The dollar index fell 0.3% to 106.29, but had been as low as 105.31 the previous session.
The dollar also lost 0.9% against the offshore yuan at 7.1830, erasing all the gains made on Monday.
Bitcoin was jerked again after top cryptocurrency lender BlockFi filed for Chapter 11 bankruptcy protection with eight affiliates. Read more
In commodities markets, swings in the dollar sent gold up 0.5% to $1,751 an ounce.
Reporting by Wayne Cole and Rae Wee; Editing by Sam Holmes and Bradley Perrett
Our standards: The Thomson Reuters Trust Principles.
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