By Kevin Buckland
TOKYO (Reuters) – Chinese stocks rose on Wednesday, lifting regional markets and helping extend a stimulus-driven global rally that also underpinned risk-sensitive currencies, while Brent crude hovered near a three-week high.
The dollar plunged after weak U.S. macroeconomic data released last night boosted expectations of a second major interest rate cut at the next Federal Reserve meeting. Gold rose to a new record high.
By 0230 GMT, mainland Chinese blue-chips were up 3.1%, following a 4.3% jump in the previous session. Hong Kong’s Hang Seng rose 2.2%, adding to Tuesday’s 4.1% gain.
The strong start for Chinese stocks boosted other regional indexes, with Taiwan’s benchmark index up 1.3% and South Korea’s Kospi gaining 0.1%.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1%.
Japan’s Nikkei rebounded from early weakness to rise 0.3 percent, helped by a retreat in the traditional safe-haven yen.
The People’s Bank of China announced a broad easing of monetary policy on Tuesday, cutting medium-term interest rates for banks on Wednesday. Beijing’s sweeping stimulus – the biggest since the pandemic – also includes measures to boost China’s stock market and support for the struggling property sector.
“In Asia, the focus is on China,” UBS analysts wrote in a note to clients.
“The debate remains intense as to whether this rally will continue, although the table sees investors opting to buy/short cover first and ask questions later.”
The yen fell about 0.17% to 143.47 per dollar, reversing earlier gains amid broad dollar weakness.
The euro rose to $1.11915 after hitting $1.1194 for the first time in a month.
The British pound rose to $1.3417 and earlier hit a new high since March 2022 at $1.3430.
Data showed overnight that U.S. consumer confidence unexpectedly fell to 98.7 this month from an upwardly revised 105.6 in August. The drop was the largest since August 2021.
The odds of another 50-basis-point rate cut by the Federal Reserve at its November meeting rose to 60.4% from 53% a day earlier, according to CME Group’s FedWatch tool.
Meanwhile, the Australian dollar initially hit its highest level since February last year at $0.6908, but then retreated to $0.68915 after monthly inflation figures showed some cooling, potentially setting the stage for an earlier rate cut by the Reserve Bank.
“The decline in underlying measures of inflation is an unexpected and welcome surprise,” said Tony Sycamore, an analyst at IG.
If the cooling is replicated in next month’s quarterly price data, “a dovish turn by the RBA will be set up,” leading to a quarter-point rate cut in December, Sycamore added.
Gold rose 0.2 percent to $2,662.50 an ounce, having earlier hit a new record high of $2,665.10.
Brent crude futures fell 19 cents to $74.98 a barrel but held near Tuesday’s high of $75.87, a level not seen since Sept. 3.
U.S. West Texas Intermediate crude lost 22 cents to $71.34 a barrel.
(Reporting by Kevin Buckland; editing by Shri Navaratnam)