Asia higher on optimism over China

Asian stock markets rally on China’s soothing words

US stock markets had a mixed result overnight, with the FOMC statement being largely discounted. However, Asia markets are off to a lively start after China officials called a meeting with bankers overnight and assured them that the recent clampdowns were targetted and not part of a broader strategy. Temporary abating of China risk has been enough to greenlight a broad rally across the region.

Overnight, the S&P 500 was unchanged, while the Nasdaq rose by 0.70%, while the Dow Jones fell by 0.37%. That price action continues in Asia with Nasdaq futures flat, but S&P 500 and Dow futures easing. In Asia, the Nikkei 225 has climbed by 0.65%, with the Kospi rising 0.30%. China markets welcomed the governmental words overnight and, after a few torrid sessions, are all higher this morning. The Shanghai Composite has rallied 1.25%, with the CSI 300 jumping by 1.45% and Hong Kong, heavy with China-tech, leaping 2.40% higher.

Regionally, Singapore has risen 0.60% as the MAS greenlights a resumption of full bank dividends. The outlook is bright for the banking sector, which many consider a somewhat boring industry. The major banks in Singapore are well capitalised, the city-state is well run and the vaccination rollout is moving at breakneck speed.

Kuala Lumpur is 0.30% higher, while Taipei has risen 0.70%. Jakarta is flat while Bangkok bucks the trend, falling 0.60% after returning from holiday. Australia is also higher, with the ASX 200 and All Ordinaries rising by 0.40%.

The upbeat mood in Asia, and some relief that the China clampdown may be done, for now, should be enough to lift European markets at the open this afternoon. The US releases Advance GDP and Core PCE, with both expected to show massive gains. Unless Amazon disappoints, it is hard to see the US data derailing the rally on Wall Street either, now that the FOMC is out of the way. dow

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