Asian markets rise as China signals stronger stimulus to boost economy

Chinese shares surged, along with most Asian equities, following signals from the country’s top leaders of stronger stimulus measures next year to revive its struggling economy.

China’s benchmark equity gauge jumped more than 3% at the open before trimming its advance, News.Az reports, citing foreign media.

Stocks in South Korea and Japan also rallied. Iron ore rose to a two-month high on optimism Beijing’s pledges will flow through the economy. The Australian dollar fell after the central bank said inflation risks look to be easing.

Chinese President Xi Jinping’s decision-making Politburo vowed to embrace a “moderately loose” monetary policy in 2025, signaling more rate cuts ahead and shifting from a “prudent” strategy that’s held for nearly 14 years. Investors will now shift focus to annual closed-door Central Economic Work Conference due to start Wednesday. Brokerages raised forecasts for the budget deficit next year following the news.

Shares in China and Hong Kong shares trimmed their opening surge as investors awaited further details of the potential stimulus and on a possible unwinding of bullish bets put on last week. Investors had increased bullish positioning on the nation’s equities prior to the Politburo’s announcements, Citigroup Inc. said.

The Aussie extended an intraday decline after the Reserve Bank of Australia kept interest rates on hold as economists forecast, but said it’s gaining some confidence inflation pressures are easing.

The US Treasury 10-year yield fell one basis point to 4.19%, while the Bloomberg Dollar Spot Index was little changed. US stock futures traded in a narrow range.

Chinese manufacturers have begun limiting sales to the US and Europe of key components used to build unmanned aerial vehicles that have become a vital part of Ukraine’s defense. The moves are a prelude to broader export restrictions on drone parts that western officials expect Beijing to enforce in the new year, according to people who asked not to be identified.

Elsewhere in Asia, Korean equities headed for their first daily advance since last week’s short-lived martial law thrust the country into political turmoil. The Justice Ministry banned President Yoon Suk Yeol from traveling overseas as a series of probes put the embattled leader at risk of detention over his chaotic declaration of military rule.

In the US, the S&P 500 slipped from nearly overbought technical levels, following a series of all-time highs, with traders awaiting key inflation data that will help shape the outlook for Federal Reserve monetary policy. Nvidia Corp. slid as China opened a probe over suspicions the US chipmaker broke anti-monopoly laws around a 2020 deal.

US data including Wednesday’s consumer price index will offer Fed officials a final look at the pricing environment ahead of their meeting the following week. Any indication that progress has stalled on the inflation front could well undercut the chances of a third straight reduction in rates.

HSBC Holdings Plc is forecasting another 10% gain for the S&P 500 Index in 2025.

News.Az