(Bloomberg) — Chinese stocks rallied after policymakers took further steps to restore investor confidence, defying broader weakness in Asia following a technology-fueled decline on Wall Street.
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An indicator of Hong Kong-listed Chinese companies rose as much as 3.8%, while the CSI 300 index of mainland stocks rose 1.8%. Real estate stocks led gains after banks increased financing support for the struggling sector. A renewed crackdown on quant fund trading also eased concerns about short selling.
That contrasts with losses in other Asian markets from Japan to South Korea and Australia, after the Nasdaq 100 fell nearly 1% on Tuesday and the S&P 500 fell below 5,000. The focus is on the profits of chip maker Nvidia Corp. and the minutes of the Federal Reserve's most recent monetary policy meeting, due later on Wednesday. U.S. stock contracts slipped.
“The AI hype has died down a bit and there could be some rotation within North Asia to China, where consumers are still buoyed by relatively better consumer spending post-holidays while market stabilization measures are still underway,” said Marvin Chen, analyst at Bloomberg Intelligence.
HSBC Holdings Plc's profit fell 80% in the fourth quarter after it took charges for stakes in a Chinese bank and the sale of its French retail business. Aluminum rose on speculation that a new wave of U.S. sanctions against Russia could target the metal and potentially disrupt supplies.
The dollar stabilized and 10-year Treasury yields were little changed in Asian trading, while the ongoing bearish outlook for China's steel demand pushed iron ore to a three-month low.
In Japan, the recent loss of momentum has pushed the Nikkei 225 further away from its highest ever close of 38,915.87 in 1989. Still, macro and equity hedge funds are betting on Japan this year, predicting the central bank will change policy after eight years of negative interest rates. The yen stabilized at around 150 per dollar as the country's exports rose more than expected in January.
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Nvidia nerves
The current earnings season has so far confirmed the view that Corporate America is holding up well, even if the reporting period was mixed for the “Magnificent Seven” megacaps. Other highlights of the U.S. session included Walmart Inc. rising after reporting strong earnings, while Palo Alto Networks Inc. slumped in late trading after cutting its sales forecast for the year.
Ahead of Nvidia's numbers, some traders decided to take profits – with the market also weighing a report that Microsoft Corp. developed a network card as an alternative to the card supplied by the chip manufacturer.
The hype around artificial intelligence has driven up stocks associated with the technology, and Nvidia is one of the few companies that has seen significant revenue growth from AI.
Minutes from the Fed's January meeting are also expected on Wednesday, offering traders further clues on where policymakers stand on a rate cut timeline. Faster-than-expected inflation last week fueled concerns that the Fed may not start cutting interest rates as soon – or as sharply – as market participants had previously expected this year.
Both oil and gold rose slightly.
Important events this week:
Eurozone consumer confidence, Wednesday
Nvidia results, Wednesday
The Federal Reserve will release minutes from its January meeting on Wednesday
Atlanta Fed President Raphael Bostic speaks on Wednesday
Eurozone S&P Global Services PMI, S&P Global Manufacturing PMI, CPI, Thursday
US initial jobless claims, US existing home sales, Thursday
ECB publishes report on January meeting on Thursday
Fed Governor Lisa Cook and Minneapolis Fed President Neel Kashkari speak Thursday
Property prices in China, Friday
Germany IFO business climate, GDP, Friday
The ECB will publish a survey on 1- and 3-year inflation expectations on Friday
Some of the key moves in the markets:
Shares
S&P 500 futures fell 0.1% at 1:37 p.m. Tokyo time
Japan's Topix fell 0.3%
Australia's S&P/ASX 200 fell 0.7%
Hong Kong's Hang Seng rose 3%
The Shanghai Composite rose 1.7%
Euro Stoxx 50 futures remained unchanged
Nasdaq 100 futures fell 0.3%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0815
The Japanese yen was little changed at 149.95 per dollar
The offshore yuan rose 0.2% to 7.1869 per dollar
The Australian dollar rose 0.3% to $0.6567
Cryptocurrencies
Bitcoin fell 0.4% to $51,841.01
Ether was little changed at $2,989.89
Tie up
The yield on 10-year government bonds remained little changed at 4.27%
Japan's 10-year yield was unchanged at 0.725%
Australia's 10-year yield was little changed at 4.18%
raw materials
West Texas Intermediate crude rose 0.3% to $77.27 a barrel
Spot gold rose 0.3% to $2,030.55 an ounce
This story was produced with support from Bloomberg Automation.
– With support from Rob Verdonck.
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