SINGAPORE- China stocks surged and commodities found support on Tuesday on Beijing’s new promises of rate cuts and a boost to consumption, while the Australian dollar slid and global stocks were wobbly ahead of a crucial US inflation reading.
Australia’s central bank left its cash rate unchanged at 4.35 percent as expected, though the Aussie fell sharply in the aftermath as policymakers toned down their hawkish language.
Overnight, the S&P 500 fell 0.6 percent and futures dipped 0.04 percent in the Asian afternoon.
A 2.5 percent drop for chip titan Nvidiawhich edged a fraction lower still in after-hours trade following China opening an antitrust investigation, weighed on the mood.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose a touch, helped by a 0.8 percent gain for the Hang Seng index and a 1.4 percent rise in the blue chip CSI300 index.
Japan’s Nikkei rose 0.5 percent.
A statement from China’s Politburo on Monday had already spurred a late surge in Hong Kong stocks and sent yields on Chinese government bonds to record lows on bets there is help at hand to lift sluggish spending and economic growth.
State media outlet Xinhua reported the top Communist Party officials had shifted the monetary policy stance from “prudent” to “moderately loose,” mirroring their response in previous crises, and would stabilize markets and “vigorously” boost consumption.
“The statement signals potential rate cuts, fiscal expansion and asset buying ahead,” said analysts at ANZ in a note, though with the magnitude unclear and further details possibly coming later in the week from the Central Economic Work Conference.
The rally lifted China’s major indexes to one-month highs with consumer shares notching large gains. The optimism also overshadowed dismal China trade numbers, which showed exports grew at a slower pace in November while imports unexpectedly shrank.
But the runaway rally in Chinese bonds, which extended on Tuesday to drive 10-year and 30-year yields to record lows suggests some investors doubt the pledges are going to lift long-run growth in China.
