SINGAPORE- Chinese shares slumped and commodities were struggling to find a footing on Wednesday as investors tempered expectations for a robust Chinese economic recovery, while a downbeat outlook from New Zealand’s central bank sent the kiwi to a seven-week low.
The Shanghai Composite and blue-chip CSI300 nursed losses of around 4 percent in afternoon trade, paring much larger falls when the finance ministry called a press conference on fiscal policy and raised expectations of stimulus.
Hong Kong’s Hang Seng bounced to flat and the Australian dollar shed losses.
China’s surging markets had turned suddenly fragile and commodities from oil to metals fell on Tuesday when a news conference from China’s National Development and Reform Commission yielded no major new stimulus details.
“To be fair only the Ministry of Finance or State Council can adjust the budget,” said Nick Ferres, chief investment officer at Vantage Point Asset Management, as focus shifted to the Oct. 12 announcement and Monday’s market reaction.
Markets are looking for a spending package between 2 and 10 trillion yuan ($280 billion to $1.4 trillion) and Ferres said his sense was that support needs to be on top of previous commitments and boost GDP by about 2 percentage points to be helpful.
Dalian iron ore and Shanghai copper pared losses in the afternoon but were still in the red. Brent crude futures which fell 4.6 percent overnight, steadied at $77.88 a barrel.
Japan’s Nikkei rose 1 percent, with shares in convenience store Seven & I Holdings leaping after Bloomberg News reported Canadian retailer Alimentation Couche-Tard would raise its buyout offer.
Traders have so far regarded China’s stocks slide as an overdue pullback after a hefty 25 percent surge in the previous six sessions.
Still, the drops leave mainland stocks on course for their largest losses since April 2022, when pandemic lockdowns were in force in major cities.
Just about every sector was down in China, though property and tourism were heavily beaten-down in a sign of some doubts that state support will be large and swift enough to turn around consumers’ confidence.
