ASIA MARKETS: China Stocks Rise After President Xi Jinping's Verbal Support For Market
03 May 2016 - 6:32AM
Dow Jones News
By Dominique Fong
Aussie stocks soar on unexpected rate cut
Chinese shares rose Tuesday as investors gained confidence from
President Xi Jinping's recently stated support of the "healthy
development" of the country's stock markets.
The Shanghai Composite Index gained 1.7%, while the smaller Shenzhen Composite Index rose 2.2%.
Elsewhere in Asia, stock markets were mixed: Korea's Kospi was
up 0.3% and Hong Kong's Hang Seng Index slipped 1.1%.
In Australia, shares were rising before the Reserve Bank of
Australia cut the cash interest rate to 1.75%
(http://www.marketwatch.com/story/reserve-bank-of-australia-cuts-cash-rate-to-175-2016-05-03-0485414),
a new record low, from 2%. Pressure had been mounting in recent
months for the central bank to slash rates to keep economic growth
from slowing.
Japan's stock market was closed Tuesday in observance of a
three-day public holiday. It will reopen Friday. The Nikkei Stock
Average had tumbled 3.1% Monday on the continued disappointment
that the Bank of Japan left interest rates and its easing policies
unchanged last week.
In China, markets resumed trading after being closed Monday.
Chinese investors appeared to latch onto President Xi's call
late last Friday -- after markets had shut -- to maintain a
"healthy development of the stock market," analysts said. Chinese
leaders urged "strengthening market supervision and protecting
investor interests," according to a statement carried by official
media.
"They continue to believe that China will continue to maintain
the stock market to become more bullish," says Castor Pang, head of
research at Core Pacific-Yamaichi International, a Hong Kong
brokerage.
But such optimism could be short-lived, analysts said. Recent
economic data continue to underscore the slowing pace of China's
economy.
On Sunday, official data showed that China's manufacturing
activity grew in April, albeit at a slower pace than in March.
Then on Tuesday, an unofficial gauge indicated that total new
orders were sluggish and foreign demand for Chinese goods weakened.
The Caixin China general manufacturing purchasing managers' index
fell to 49.4 in April compared with 49.7 in March
(http://www.marketwatch.com/story/chinas-caixin-manufacturing-pmi-slips-again-2016-05-02).
A reading below 50 indicates economic contraction.
The weaker data may lead investors to dial back expectations of
further policy easing by China's central bank, analysts said.
"The market is still worried about whether Beijing will continue
its easing policy to support growth, which is evidenced by
shrinking turnover for the past few weeks," says Zheng Chunming, an
analyst at Capital Securities Corp.
Korean shares slipped after data in the morning showed the
consumer price index rose 1% in April from the year before as the
decline in oil prices capped inflation below the 2% target.
Meanwhile, the Japanese yen hovered at its 18-month high against
the U.S. dollar Monday and was recently trading at about Yen106.16
to one dollar in early Asian trading hours.
Brent crude oil prices slid 0.2% to $45.72 per barrel.
(END) Dow Jones Newswires
May 03, 2016 01:17 ET (05:17 GMT)
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