Most Asian stocks rose on Friday, tracking strength in Wall Street after the Federal Reserve cut interest rates as expected, while anticipation of more fiscal stimulus in China also buoyed local markets.
Regional markets took positive cues from a record-high close on the S&P 500 and the NASDAQ Composite, as markets were encouraged by the Fed signaling that it did plan to cut interest rates further, amid progress in bringing down inflation.
Risk appetite also remained upbeat after Donald Trump won the 2024 presidential election earlier this week, although the implications of a Trump presidency for Asia were still potentially negative, given his plans to enact more protectionist trade policies.
U.S. stock index futures were flat in Asian trade.
Chinese stocks rise with NPC set to deliver fiscal stimulus
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose 0.4% and 0.6%, respectively, while Hong Kong’s Hang Seng index added 0.6%.
Mainland Chinese stock indexes were the best performers this week despite concerns over a Trump presidency. The CSI 300 and the SSEC were up nearly 7% each this week.
Focus was squarely on a meeting of the Standing Committee of the National People’s Congress, which is set to conclude later on Friday. The NPC is widely expected to outline plans for more fiscal spending.
Analysts expect at least 10 trillion yuan ($1.6 trillion) in additional spending over the coming years, as Beijing struggles to shore up slowing economic growth.
A second Trump presidency is also expected to see Beijing roll out more stimulus, JPMorgan analysts wrote in a recent note. Trump has vowed to impose a 60% tariff on all Chinese imports, heralding more economic headwinds for China.
Beijing had outlined a slew of monetary and fiscal measures over the past month, aimed at supporting the economy. But a lack of clear details on their scale and timing had left markets wanting.
Asian stocks upbeat, head for weekly gains
Most Asian markets drifted higher on Friday, and were set for weekly gains in one of the most important weeks of the year.
Japan’s Nikkei 225 and TOPIX indexes were muted on Friday, but were up nearly 4% apiece this week. Japanese stocks rallied as the yen weakened sharply against the dollar, although it found some stability on Friday after the Fed’s rate cut.
Australia’s ASX 200 rose 0.9% and was close to a record high. The index was also set to add 2.3% this week, amid some positive earnings.
South Korea’s KOSPI rose 0.7% and was set to rise 1.7% this week, as local technology stocks tracked strength in their U.S. peers.
Indian stocks lagged this week, with the Nifty 50 trading down 0.4% this week. Indian markets were walloped by sustained foreign capital outflows through the past month, amid a heavy dose of profit-taking and as investors pivoted into Chinese markets.
Regional markets reacted positively to Trump’s election win, given that it cleared a major point of uncertainty for markets. This risk-on sentiment was furthered by the Fed's rate cut on Thursday, with the central bank also flagging strength in the U.S. economy.
Source: Investing