The global markets began the week with mixed responses as investors reacted to China’s stimulus measures and upcoming interest rate decisions. Key Asian indices, such as the Hang Seng, rallied on China’s policy moves, while Australia’s ASX 200 Index showed declines ahead of the Reserve Bank of Australia (RBA) rate decision. Meanwhile, US equity markets started the week with positive momentum, driven by soft landing expectations from the US services sector PMI data.
Hang Seng Surges on China’s Stimulus Measures
On Tuesday, the Hang Seng Index rallied by 2.40%, driven by China’s economic stimulus measures. The People’s Bank of China (PBoC) cut the Reserve Requirement Ratio (RRR) by 50 basis points, signalling its intent to support the struggling economy. It also lowered mortgage rates to boost the real estate sector, further fuelling the rally in Hong Kong-listed stocks.
Asian-and-US-Markets-Show-Mixed-Reactions-Amidst-Stimulus-and-Rate-Decisions
Tech and real estate stocks led the surge, with the Hang Seng Tech Index (HSTECH) rising 2.80% and the Hang Seng Mainland Properties Index (HMPI) gaining 2.99%. Key players such as Alibaba, Baidu, and Tencent showed strong performances, advancing by 2.54%, 1.77%, and 1.56%, respectively.
In mainland China, the stimulus measures lifted the CSI 300 and the Shanghai Composite by 1.30% and 1.47%. Investors welcomed the prospect of further economic support from the PBoC, increasing demand for Chinese assets.
ASX 200 Declines Amidst Rate Uncertainty
In contrast to the Hang Seng’s strong performance, the ASX 200 Index fell by 0.39% on Tuesday morning. Investor sentiment remained cautious as concerns over the RBA’s upcoming interest rate decision loomed. Financial stocks took the brunt of the decline, with National Australia Bank (NAB) and Westpac Banking Corp (WBC) falling 2.46% and 2.38%, respectively.
However, the downside was limited by a rally in mining stocks. Major players like Rio Tinto Ltd (RIO) and BHP Group Ltd (BHP) gained 3.46% and 2.34%, buoyed by China’s stimulus measures. The Australian economy remains closely tied to Chinese demand for commodities, and the stimulus provided a much-needed boost to mining companies.
Japan’s Nikkei Supported by Yen and Tech Gains
Japan’s Nikkei 225 Index advanced by 0.68% on Tuesday morning. The stability of the USD/JPY exchange rate, which held around 143, supported demand for export stocks. Technology shares also received a boost, with overnight gains in US tech stocks influencing sentiment.
Notable gainers included Sony Corp, which surged 3.22%, and SoftBank Group, which advanced 1.49%. Japan’s private sector PMI data showed mixed results. The Jibun Bank Services PMI rose to 53.9 in September, while the Manufacturing PMI dipped slightly to 49.6. Input cost inflation eased across the board, reducing pressure on the Bank of Japan to raise rates.
US Equity Markets Maintain Positive Momentum
US equity markets had a strong start to the week, driven by positive economic data. The S&P 500 gained 0.28%, while the Dow and Nasdaq advanced by 0.15% and 0.14%, respectively. Investors were encouraged by the US S&P Global Services PMI, which fell slightly from 55.7 in August to 55.4 in September.
Although the decline was modest, it reinforced expectations of a soft landing for the US economy. This provided a boost to riskier assets, including stocks in the tech and consumer sectors. The focus remains on upcoming Federal Reserve policy decisions and inflation data, as markets assess the likelihood of further rate hikes.
ASX 200 Sector Performance: Winners and Losers
Despite the broader market decline, some sectors of the ASX 200 Index showed positive movement. The materials sector led the gains, advancing by 2.38%, supported by strong performances from mining giants. The energy sector also showed resilience, rising by 1.23%, as global energy prices remained stable.
However, financials weighed heavily on the index, falling by 1.81%. Investors remained cautious ahead of the RBA’s next interest rate decision, which is expected to significantly impact banking stocks. Staples also performed poorly, declining by 2.10%, as concerns over consumer spending lingered.
Top Gainers and Losers on the ASX 200
Among the top-performing stocks, Cettire Ltd (CTT) saw a remarkable 70.68% surge, while Lotus Resources Ltd (LOT) gained 14.58%. Other notable gainers included Bannerman Energy Ltd (BMN) and Boss Energy Ltd (BOE), which advanced by 11.24% and 10.69%, respectively.
On the other hand, Light & Wonder Inc (LNW) and Tabcorp Holdings Ltd (TAH) were the biggest losers, falling by 14.46% and 6.52%, respectively. Myer Holdings Ltd (MYR) also declined, shedding 4.44%.
Conclusion
Global markets remain on edge as investors react to China’s stimulus and await crucial central bank decisions. The PBoC’s moves provided a much-needed boost to the Hang Seng and mainland Chinese markets, while concerns over the RBA’s rate path weighed on Australian stocks. In the US, positive PMI data suggested a soft landing, fuelling optimism among investors. However, market volatility is likely to persist as central banks in major economies continue to navigate inflation and growth challenges.
