Shares have been delayed for some time in recent weeks due to painful sales due to central bank monetary tightening – especially by the US Federal Reserve – and rising consumer prices, which are worrying about a recession or recession.
The contraction in US Treasury yields gave New York traders a boost, as well as a jump in Chinese listed companies, which fueled growing optimism that Beijing intends to relax its long-standing actions against the technology sector.
The improved mood around technology has come after a report this week said that China was close to ending a survey of the driving app Didi Global and recovering its main apps this week.
The Wall Street Journal also said that investigations into two other companies – the Full Truck Alliance and the Kanzhun recruitment platform – were nearing completion.
And on Tuesday, the authorities approved a second round of 60 games in a further step to ease their approach to the world’s largest mobile entertainment market.
Citi analysts said that “the announcement will also send a positive signal of policy-making to the entire China Internet sector”.
Heavyweights in the market took over in Hong Kong with Proof of Absence by more than six percent, Netease four percent higher and Tencent more than three percent, which helped the Hang Seng Index rise more than one percent.
Shanghai, Tokyo, Sydney, Seoul, Wellington, Taipei and Manila were also positive areas.
The move comes as Beijing relaxes its strict Covid closure measures, allowing the world’s number two economy to return to life in a month’s time.
“The risk aversion is due to a positive China deficit, as the outlook has brightened as Covid restrictions have eased, and state-owned banks are committed to increasing lending again,” said Stephen Innes of SPI Asset Management.
“It certainly feels like the tide is turning on the mainland, although the overall tone is even more cautiously optimistic, with a key emphasis on ‘cautious’.
All eyes are on the release of US inflation data on Friday to get a better idea of the Fed’s plans as it raises borrowing costs.
Officials are expected to raise tariffs by half a point each in June and July, and some commentators warn that a strong report on Friday could allow them to unveil a three-quarters-point decision in September.
Such a move would push the dollar even higher against its peers, with the unit at a 20-year high against the yen.
And regulators said the uncertainty would continue to cause market volatility.
“The fact for the economy and probably the stock market is that the central bank’s aggressive interest rate hikes are likely to have a significant impact on household consumption, as the cost of living is due to goods and services, lower real wage gains and significantly higher mortgage payments,” Innes added.
“Therefore, the central bank’s endpoint is to cool inflation by slowing down the economy and tightening financial conditions at the expense of stock market investors until price pressures ease.”
And BlackRock’s Kate Moore explained to Bloomberg television that “understanding the policy in the coming months will be increasingly difficult.”
“There seems to be a lack of strong conviction towards the market in all areas of investment. We will see many more investors on the sidelines, be careful in the situation.”
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