What you need to know:
> Equities mixed as China’s stimulus-driven rally slows.
> Forex, debt markets steady after jolts.
> Oil edges higher.
> Bitcoin holds at highest since May.
China-focused stocks were mixed as this week’s stimulus-driven rally showed signs of losing steam.
The CSI 300 index of major Shanghai- and Shenzhen-listed stocks was flat on the day after dipping in and out of negative territory in the morning session, but in Hong Kong, the Hang Seng China Enterprises index was up 1 per cent.
Both indices on Tuesday touched their highest levels since June.
Hong Kong’s broader Hang Seng index rose 0.8 per cent thanks to strong gains for consumer, healthcare and energy stocks. Tokyo’s Topix also added 0.4 per cent, buoyed by the basic materials, utilities and energy segments.
In Sydney, however, the S&P/ASX 200 was off 0.4 per cent with declines for most segments offsetting a 1.1 per cent gain for basic materials stocks. The Kospi Composite index in Seoul was down 0.2 per cent.
The moves came after US quarterly corporate earnings boosted Wall Street, with tech-heavy Nasdaq Composite index climbing to a record high — before giving back its gain for the day — as shares in Alphabet hit a record after its results beat forecasts.
Fresh moves this week by the Chinese authorities to stimulate the country’s economy injected a more confident tone into global equity and industrial metal markets on Tuesday. But while market reaction has been broadly positive, ING China economist Iris Pang was wary about overstating the scale of the stimulus.
“While the State Council has announced $386bn in fiscal stimulus, only a small portion of this is new, i.e. real stimulus, rather than just planned spending,” Ms Pang said. “The good news, however, is that the government wants to spend money earlier than planned.”
Forex and fixed income:
Foreign exchange and sovereign debt markets were steadier as the impact of China’s economic stimulus and speculation earlier in the week about the trajectory of Japan’s monetary policy waned.
In China, the onshore renminbi exchange rate, which moves within a trading band of 2 per cent to either side of a midpoint, was 0.1 per cent weaker at Rmb 6.7999 per dollar, a day after the Chinese currency touched a fresh one-year low.
The US dollar index measuring the greenback against a basket of peers was unmoved, while the Japanese yen was 0.1 per cent weaker at ¥111.25 per dollar.
The Australian currency was off 0.4 per cent at $0.7394 against its US counterpart after second-quarter consumer inflation data came in a whisker below expectations. The New Zealand currency was down 0.2 per cent at $0.6788 per dollar.
In sovereign debt markets, the 10-year Japanese government bond yield was down 1 basis point at 0.063 per cent after touching its highest level in six months on Monday amid market speculation about potential changes to central bank monetary policy.
The yield on US 10-year Treasuries was down 2bp at 2.934 per cent while that on the equivalent maturity Australian note was 4bps lower at 2.676 per cent.
Oil prices pushed higher with investors expecting upcoming data from the Energy Information Administration to show falling US inventories, according to ANZ analysts. Brent crude rose 0.7 per cent to $73.95 a barrel while West Texas Intermediate added 0.3 per cent to $68.75.
Gold was up 0.2 per cent at $1,226 an ounce.
Bitcoin was steady at $8,325 after surging to its highest point since May on Tuesday.