SYDNEY (Reuters) – Chinese stocks are headed for the best week since 2008 as Beijing rolled out a huge stimulus package to revive the economy, lifting Asian shares to 2-1/2-year highs, while a sharp fall in oil prices bodes well for disinflation globally.
The yen retreated to three-week lows ahead of a leadership contest of Japan’s ruling Liberal Democratic Party on Friday, as investors looked to gauge what it could mean for the country’s rate hike path.
In the United States, the core personal consumption expenditures (PCE) price index – the Fed’s preferred measure of inflation – is due later in the day. Forecasts are centred around a small monthly rise of 0.2%, as markets are split on the size of an expected Federal Reserve rate cut in November.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1.1% to its highest level since February 2022. It was headed for a weekly gain of 6%, thanks to a huge turnaround in Chinese shares.
China’s blue chips jumped another 2.9%, bringing the weekly rise to 14%, the most since November 2008.
Hong Kong’s Hang Seng index also surged 2.7% and was up 12% for the week, its best performance since 2009.
“Beijing seems finally determined to roll out its bazooka stimulus in rapid succession… Beijing’s recognition of the severe situation of the economy and lack of success in a piecemeal approach should be valued by markets,” said Ting Lu, chief China economist at Nomura.
“But eventually it is still necessary for Beijing to introduce well thought policies to address many of the deep-rooted problems, particularly regarding how to stabilize the property sector, which is now in its fourth year of contraction.”
