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Business Maverick

Asia stocks rise on China support, oil pares gains: markets wrap

Asia stocks rise on China support, oil pares gains: markets wrap
An aerial view of apartment blocks under construction at a China Vanke residential development, centre, in Xining, Qinghai province, China, on 28 September 2021. (Photo: Qilai Shen/Bloomberg)

Stocks in Asia advanced after China announced more measures to support the country’s slumping equity market and the property sector.

Property shares outperformed in Hong Kong after the southern metropolis of Guangzhou eased home-buying restrictions. China’s securities regulator said over the weekend it will halt the lending of certain shares for short selling from Monday. The measures follow a slide in the nation’s stocks, with the MSCI China Index having tumbled about 60% from a February 2021 peak.

“The very poor sentiment leading to this could potentially open the door for some technical rebound,” Homin Lee, senior macro strategist at Lombard Odier, said on Bloomberg Television. “We’re slightly more cautious because what’s really needed is a change in the inflation outlook for the country and the overall sentiment in the private sector.”

Still, sentiment in the stock market may remain fragile after a Hong Kong court ordered China Evergrande Group to be liquidated. The company’s shares dropped nearly 21% before being suspended.

Meanwhile, Japanese equities rose, led by energy producers, following gains in oil. Contracts for US stocks were little changed as investors weighed risks from the Middle East conflicts at the start of a busy week for the global policy outlook.

Both Brent and West Texas Intermediate crude trimmed their advance after rising to their highest levels since November in intraday trading. The US said Iranian-backed militants killed three service members, with US President Joe Biden pledging to retaliate. Oil had also climbed on Friday after Houthi rebels attacked a vessel carrying Russian fuel.

The dollar and Treasuries were both little changed in Asia. Mixed US economic data on Friday spurred concerns the Federal Reserve will signal patience about the pace of interest-rate cuts when it announces its next policy decision on Wednesday. 

This week also brings a slew of key data, from European GDP on Tuesday, to China PMI and Australian inflation on Wednesday, then European inflation and a Bank of England policy decision on Thursday. 

“We think the Fed is likely to reiterate its data-dependent stance and caution that it is willing to exercise patience,” analysts at ANZ Bank Ltd, including Miles Workman, wrote in a report. “The Fed will be cautious about any reacceleration of inflation pressures from above-trend growth and the resilient labour market.”

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