Market Close Feb 10

China data leads regional markets higher

China stocks hit 13-year highs; Crypto-currencies hit another peak; Powell seen reiterating dovish Fed message

China data leads regional markets higher
Tuk-tuks that are used to transport tourists around the city are seen idle due to travel bans and border closures from the coronavirus pandemic in a parking lot in downtown Bangkok on February 3, 2021. Photo: Reuters/Jorge Silva.

(ATF) Hong Kong: The Asian risk rally extended its run after China’s return to factory-gate inflation pointed to a momentum build-up in the world’s second largest economy.

Sentiment remained upbeat ahead of the launch of the US fiscal stimulus and a speech by US Federal Reserve Chair Jerome Powell at 1900 GMT where he is expected to reiterate the dovish message of the last FOMC meeting.

Bitcoin continued its searing run hitting another peak of $48,226 and is currently trading just below $47,000. Ethereum, the second-largest cryptocurrency by market capitalization, also hit a fresh all-time high of $1,824 in the last 24 hours.

Japan’s Nikkei 225 index edged up 0.19%, Australia’s S&P ASX 200 added 0.52% and Hong Kong’s Hang Seng index jumped 1.91%.

But the regional outperformer was mainland China’s CSI300 with a 2.14% surge after PPI returned to inflation of 0.3% year on year in January, ending 11 months of deflation. Regionally, the MSCI Asia Pacific index 0.63%.

“We expect the uptrend in PPI inflation to extend, rising to about 1% in February and peaking at about 4% in May before easing gradually on base effects,” Barclays economists Yingke Zhou, Jian Chang and Eric Zhu said.

“We think the continued increase in PPI inflation point to further improvement in industrial profits, which should lend some support to manufacturing investment this year.”

China’s manufacturing investment has been rebounding quickly in recent months and is seen sustaining the economic recovery when construction loses steam, while industrial profits have been recovering since Q2 2020 and are seen riding the buoyant global demand trajectory in 2021.

This is leading to expectation of policy normalisation in China although some argue that policymakers will avoid a collapsing credit availability which would morph into a headwind.

“Chinese policy normalization is intact. Nevertheless, China's economy – and global economies levered to China's – remain supported in H1, boosted by the lagging impact of massive stimulus,” BCA Research analysts said in a note. “Therefore, the outlook for China's equity market remains upbeat even though it will underperform global stocks this year”

The CSI 300 benchmark rose to levels not seen since October 2007 in its last trading session before the Lunar New Year holiday.

The offshore Chinese yuan rose to 6.4262 against the dollar, within sight of its 2-and-a-half-year high of 6.4119 set last month.

ATF China Bond 50 Index: Bonds fall from 6-month high

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Asia Stocks

· Japan’s Nikkei 225 index edged up 0.19%

· Australia’s S&P ASX 200 added 0.52% 

· Hong Kong’s Hang Seng index jumped 1.91%

· China’s CSI300 surged 2.14%

· The MSCI Asia Pacific index 0.63%.

Stock of the day

Kuaishou Technology shares rose as much as 13.5% after its marketing partner Baosheng Media’s shares jumped 77% in their Nasdaq trading debut in New York.

Asia markets China factory prices Recovery crypto-currencies peak Dovish Fed Kuaishou