Asian Equities Show Mixed Sentiments Amidst China’s 5% Growth Projection for 2024 – Sky Bulletin

Trading in Asia presented a mixed picture on Tuesday as China announced a 5% target for its economic growth in the current year.

While the Hong Kong market experienced a drop, the Shanghai market saw modest gains.

In his speech at the inaugural session of China’s National People’s Congress, Premier Li Qiang shared plans to issue 1 trillion yuan ($139 billion) in long-term bonds. This move aims at supporting local governments facing financial strains and promoting advancements in technology as well as bolstering social services and education.

The Chinese government also intends to increase its investment in government-subsidized housing, attempting to revitalize the real estate market, which suffered from a series of defaults by developers after excessive borrowing practices were restricted.

However, the decision to retain the deficit at 3% of GDPfell short of market expectations for a more robust fiscal policy, as noted by Stephen Innes of SPI Asset Management in his commentary.

The year’s most significant political gathering in China, the congress, customarily ratifies policy decisions made by the Communist Party’s senior leadership.

China witnessed a 5.2% growth rate last round, bouncing back from a 3% growth rate recorded in 2022. However, the immediate market reaction to Premier Li’s speech and the accompanying budget report was lukewarm. The Hang Seng index in Hong Kong dropped by 2.7% to 16,153.97, while the Shanghai Composite index edged up by 0.3% to 3,047.79.

The Nikkei 225 index in Japan was virtually unchanged, ending at 40,097.63, while the Kospi in Seoul went down by 0.9% to 2,649.40. The S&P/ASX 200 in Australia declined slightly by 0.2% to 7,724.20. India’s Sensex fell by 0.3%, and Taiwan’s Taiex increased by 0.4%.

In the US, the S&P 500 experienced a slight decrease of 0.1% to 5,130.95, and the Dow Jones Industrial Average also fell by 0.2% to 38,989.83, with the Nasdaq composite dropping by 0.4% to 16,207.51.

American stock market momentum has slowed down after a significant rally driven by signs of subsiding inflation, potential rate cuts, and ongoing economic resilience against recession forecasts. The enthusiasm for artificial intelligence technology also drove some stocks to soar, with companies like Super Micro Computer surging by nearly 1,000% over the past year.

The AI frenzy’s flagship company, Nvidia, recently saw its shares surge by 72.1% year-to-date after more than tripling in 2023. These dramatic increases come amid concerns about a potential bubble due to high profit expectations.

This week holds several potential market-impacting events, including Federal Reserve Chair Jerome Powell’s congressional testimony and a key report on the status of the US job market forecasted to show a decline from the previous month’s robust figures.

This week will also see earnings reports from various retailers, while Macy’s stock jumped 13.5% on the back of a raised acquisition offer from investment firms. In contrast, Spirit Airlines saw its shares plummet by 10.8%, and Apple experienced a 2.5% decline after a significant EU fine.

In commodities trading, U.S. benchmark crude oil fell, with electronic trading on the New York Mercantile Exchange showing a 43-cent decrease to $78.31 per barrel. Brent crude lost 35 cents, falling to $82.45 per barrel internationally.

The US dollar weakened against the Japanese yen and the euro, dipping to 150.49 yen from 150.53 yen and falling to $1.0851 from $1.0856 respectively.