Asian investors on Wednesday tracked a rally on Wall Street as a softer-than-expected report on US job openings soothed fears the Federal Reserve will hike interest rates again.
The mood brightened further in Shanghai and Hong Kong by a report that China’s biggest state-backed banks would slash rates on mortgages and deposits as part of a drive to support the country’s beleaguered property sector.
Wall Street enjoyed one of its best days in months thanks to a surge in big names including Amazon and Apple after the Labor Department’s closely followed Job Openings and Labor Turnover Summary (JOLTS) figure fell well short of forecasts.
Also, a separate report revealed consumer confidence falling owing to concerns about jobs, higher rates and lingering inflation.
The readings come ahead of the release of the Fed’s preferred gauge of inflation — the personal consumption expenditures price index — this week as well as data on non-farm payrolls and factory activity.
Analysts said the JOLTS reading would give monetary policymakers room to hold off lifting borrowing costs further, having already pushed them to a two-decade high to tame prices.
The cooling of rate expectations helped bring US Treasury yields down and even allowed investors to bring forward bets on a rate cut to June, from July, according to Bloomberg News.
“With layoffs estimated to be 8.8 million, it is still around 70 percent above its long-term average, but markets don’t care about that,” said Matthew Simpson at City Index.
“It’s the rate of change that matters. And with job openings falling to a 28-month low, it suggests the labour market is indeed softening
“And with markets ready to pounce on softer US data, any signs of weakness is likely to weigh further on yields and the US dollar. And that could be great for equity market sentiment.”
Hong Kong, Shanghai, Tokyo, Sydney, Seoul, Singapore, Taipei, Manila and Jakarta were all well up.
China property crisis
The gains extended a rally across world markets this week that came after Fed chief Jerome Powell last week repeated a pledge that rate decision-making would be based on incoming data, which has been broadly going in the right direction in recent months.
Investors took heart from a Bloomberg article that said lenders were looking to slash rates on most of China’s $5.3 trillion of outstanding mortgages.
While the report said the move would only affect loans on first homes, it indicated authorities were trying to relieve some of the pressure in the vast property industry, where a debt crisis is threatening some of the nation’s biggest developers and wider financial system.
It also comes as leaders face calls to introduce a “bazooka” stimulus for the world’s number two economy, with a series of pledges and small rate cuts doing little to ease anxiety among traders and causing foreign investors to flee.
Still, Larry Hu, of Macquarie Group, said: “This is an incremental policy step, not a game-changer because people’s confidence is still low.
“I think we’re going to see property easing come through in the coming weeks, I just don’t know if it’s going to be strong enough.”
Key figures around 0230 GMT
Tokyo – Nikkei 225: UP 0.9 percent at 32,529.72 (break)
Hong Kong – Hang Seng Index: UP 1.1 percent at 18,676.47
Shanghai – Composite: UP UP 0.4 percent at 3,147.04
Dollar/yen: UP at 146.10 yen from 145.87 yen on Tuesday
Euro/dollar: DOWN at $1.0869 from $1.0884
Pound/dollar: DOWN at $1.2630 from $1.2644
Euro/pound: UP at 86.07 pence from 86.05 pence
West Texas Intermediate: UP 0.5 percent at $80.54 per barrel
Brent North Sea crude: UP 0.4 percent at $85.81 per barrel
New York – Dow: UP 0.9 percent at 34,852.67 (close)
London – FTSE 100: UP 1.7 percent at 7,464.99 (close)
