Markets join global rally as China data beats forecasts

HONG KONG-Markets rallied Friday as forecast-busting Chinese data boosted hopes the world’s number-two economy may be stabilising after an extended slowdown. The news out of Beijing, which followed a recent batch of encouraging figures, came a day after authorities further eased restrictions on banks in a bid to kickstart growth. The region-wide gains built on a surge in New York and Europe fuelled by healthy readings on the US consumer sector and indications from the European Central Bank that it may have reached the end of its interest rate hiking cycle. The latest developments provided some much-needed relief to investors, who have endured a tough few weeks owing to concerns that a series of above-par economic figures will pressure the US Federal Reserve to lift borrowing costs once more this year.
Hong Kong led the Asian charge Friday after data showed Chinese retail sales and industrial production jumped more than expected last month. The figures were the latest suggesting the economy could be stabilising, with inflation, trade and services all showing a marked improvement in recent weeks. They also came a day after the People’s Bank of China announced a cut in the amount of cash lenders must hold in reserve, a decision aimed at freeing up cash for loans that can juice business activity. “The improvement in industrial production and retail sales is encouraging,” Frances Cheung, of Oversea-Chinese Banking Corp, said. “Recent economic data point to some stabilisation in economic activities.” However, officials added a note of caution with the latest readings, with the National Bureau of Statistics warning “there are still a lot of uncertainties and instabilities externally, and the domestic demand still appears insufficient”.
While the government has unveiled a number of targeted, piecemeal measures to charge the economy, investors have for months been calling for a “bazooka” stimulus similar to that seen in 2008 during the global financial crisis.
Still, Hong Kong was up more than one percent, while Sydney, Singapore, Seoul, Taipei, Mumbai, Jakarta and Wellington were also well in positive territory. Shanghai, however, struggled to maintain momentum and ended slightly down. Tokyo was also up more than one percent, helped by a rally in tech investor SoftBank that came after the firm’s chip design unit Arm soared 25 percent on its trading debut in New York. London rallied out of the blocks, with Paris and Frankfurt also up. “There’s a growing sense of optimism among a cohort of investors who believe that Beijing’s recent initiatives to stimulate the economy and stabilise financial markets are showing signs of success, following the sharp sell-off in August,” said SPI Asset Management’s Stephen Innes. “However, it’s essential to exercise caution, as it’s still early in this process, and a single month of positive data isn’t sufficient to confirm a sustained path to recovery.”
Traders were given a solid platform to start the day after all three main indexes on Wall Street rallied on the back of figures pointing to a still-resilient US consumer sector. The readings, which came with in-line wholesale inflation data, suggest the economy could be headed for a soft landing as the Fed tries to take the steam out of and bring down inflation by hiking interest rates.
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