HONG KONG: Chinese shares surged on Thursday as dealers returned from a week-long break that saw a global advance, but a regional rally mostly petered out, with Tokyo ending a six-day winning streak.
Most emerging market currencies retreated in the afternoon, with traders picking up profits as a rally over the past week—fuelled by waning expectations of a US interest rate—ran out of steam.
Shanghai’s composite index was the standout performer, having been closed when a below-forecast US jobs report dented the Fed’s plans to tighten monetary policy and Beijing unveiled targeted stimulus measures.
Talk that US borrowing costs would be maintained at record lows for a little longer has put a fire under global markets this week, having been pressured by fears about narrower investment opportunities.
“During the National Day holiday, regional markets including Hong Kong, and the United States have all gone up, which had a major positive impact,” Zhang Qi, an analyst from Haitong Securities, told Agence France-Presse.
This month has seen a broadly strong advance across global markets after they suffered one of their worst quarters in years, battered by the US rate fears as well as concerns over China’s struggling economy.
Shanghai ended 2.97 percent higher, with investors cheered by the release last Thursday—the first day of the market holiday—of a report showing factory activity in China had improved slightly in September.
Over the past week the government has also unveiled a series of small measures to try to bring an end to the country’s economic malaise. Among them were a passenger-vehicle purchase tax and a lowering of property down-payments for the first time in five years.
“Investors seem to be expecting more policy stimulus to come through this quarter,” Ronald Wan, chief executive at Partners Capital International in Hong Kong, said.
But he warned: “There’s some turnaround in sentiment but investors’ confidence will fade easily if the economy doesn’t recover as expected and increases the market’s volatility.”
While Shanghai advanced, other regional markets’ rallies ran out of steam. Tokyo closed 0.99 percent down and Hong Kong closed 0.71 percent—having surged more than three percent Wednesday.
Taipei and Wellington also ended in negative territory while Singapore was lower in late trade.
However, Sydney—where several firms reliant on China are listed—tracked Shanghai up to end 0.24 percent stronger. Seoul finished 0.68 percent higher on hopes of improved third-quarter corporate earnings.
“The markets are vulnerable to profit taking after their recent gains, but investor sentiment is improving,” said Mari Oshidari, a Hong Kong-based strategist at Okasan Securities Group.
In foreign exchange trade the dollar edged back against several emerging currencies in the afternoon after taking a beating for the past week.
It rose 0.34 percent against the Indonesian rupiah, having losing more than six percent against the unit since last week—that included a more than three percent rise on Wednesday.
The dollar also gained 0.18 percent against the Indian rupee, 0.30 percent against the Malaysian ringgit and 0.36 percent versus the Australian dollar.
However, it retreated against the South Korean won, while the yen and euro were also stronger.
Oil prices renewed a recent rally having been hit on Wednesday by a report showing US stockpiles and production rising.
US crude benchmark West Texas Intermediate added 0.85 percent while Brent North Sea crude gained 1.05 percent.
The contracts had surged at the start of the week as the weaker dollar made prices lower for users of foreign currencies, while hopes for easing output levels tempered worries about a global supply glut. Ongoing crises in the crude-rich Middle East also provided support.
But on Wednesday the US Department of Energy said output unexpectedly rose in the week to October 2, having fallen in the previous week. At the same time, inventories jumped more than forecast.