Global Markets Take a Breather as China’s Property Market Disappoints
Asian equities scaled back their gains today as Chinese stock market optimism fizzled out following a joint ministry press briefing on the property market. The MSCI Asia Pacific Index, which had earlier risen as much as 0.7%, gave up most of its gains as the CSI 300 Index in China erased a 1.3% rally.
Investors Seek Bigger Stimulus Package
Chinese officials announced plans to expand a program supporting “white list” projects to 4 trillion yuan ($562 billion), up from 2.23 trillion yuan already deployed. However, the market reaction was underwhelming, indicating that investors have set a high bar for stimulus optimism. According to Jun Bei Liu, a fund manager at Tribeca Investment Partners, “The challenge right now is that we don’t have a big enough package to get people excited.”
Global Economy Faces Headwinds
The Chinese economy is expected to expand 4.5% in the third quarter from a year ago, its weakest pace in six quarters. President Xi Jinping has called on government officials to make every effort to help the country meet its annual growth target of around 5%. However, fears are mounting that efforts may not be enough to revive growth.
Tech Selloff Weighs on Asian Markets
A selloff in technology companies, coupled with China’s fading rally, is souring the outlook for Asian markets. The region’s MSCI equity index is still on course for its best year since 2020, but traders are looking for fresh triggers to sustain momentum.
Earnings Season Kicks Off
Taiwan Semiconductor Manufacturing Co.’s earnings will be closely watched on Thursday for signs of slowing demand. Meanwhile, US small-caps gained on Wednesday, indicating investors are shifting out of large tech companies and into other stocks that benefit from benign economic conditions.
Commodities and Currencies
Oil prices climbed after four days of declines, while iron ore tumbled to a three-week low. The Australian dollar gained and the nation’s bonds fell after the country’s unemployment rate came in lower than expected. The Bloomberg dollar index was little changed.
Key Events This Week
Investors will be watching the ECB rate decision, US retail sales, jobless claims, and industrial production on Thursday. China’s GDP data is due on Friday, along with US housing starts and speeches from Fed officials Austan Goolsbee, Christopher Waller, and Neel Kashkari.
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