By Stella Qiu
SYDNEY (Reuters) – Chinese shares managed to hold onto weekly gains on Thursday as Beijing rolled out a slew of measures to revive market sentiment ahead of a week-long holiday, while the Nikkei vaulted to new heights after the Bank of Japan ruled out rapid rate hikes.
European markets are likely to open higher, with EUROSTOXX 50 futures up 0.1%. U.S. futures were mostly flat.
In Asia, Japan’s Nikkei surged 2.1% to close at its highest level in 34 years, helped by a 10% jump in SoftBank Group after key holding Arm forecast sales and profit exceeding the market’s expectations.
The Japanese yen slipped 0.3% to 148.63 per dollar and 10-year yields came off early highs to 0.695% as Bank of Japan Deputy Governor Shinichi Uchida said the central bank is unlikely to raise interest rates aggressively, even after ending negative rates.
Elsewhere, share markets mostly were higher but Hong Kong’s Hang Seng was an outlier, down 1.3%, and dragged MSCI’s broadest index of Asia-Pacific shares outside Japan 0.3% lower.
Shares of Alibaba fell 6.6% as its third-quarter revenue missed estimates.
China’s mainland shares managed to hold onto gains this week before the week-long Lunar New Year holiday starts on Friday.
The Shanghai composite index gained 1% and is up 4.7% for the week, the biggest gain since early November, while China’s blue-chips index was 0.2% higher and is headed for a weekly gain of 5.4%. [.SS]
Investors have taken leadership change at the top of China’s market regulator, announced on Wednesday, as another sign that authorities are taking note of the pain.
Separately, data on Thursday showed China’s consumer price index (CPI) fell 0.8% in January from a year earlier, the biggest drop since 2009, although on a monthly basis, CPI rose 0.3%, picking up from the previous month.
Tommy Xie, head of Greater China research at OCBC, said the fall was primarily driven by the negative base effect of the Lunar New Year falling in February this year, adding that he expects CPI to grow more than 0.5% y/y this month.
“As the base effect diminishes in the second quarter and with the implementation of appropriate policy support, the barrier for CPI to return to negative territory is expected to increase.”
On Wall Street, the S&P 500 closed at a record high, buoyed by strong earnings from Chipotle Mexican Grill and Ford Motor, which offset jitters about U.S. regional banks. [.N]
Shares of New York Community Bancorp closed higher after the lender appointed a new executive chairman and said it could cut exposure to the commercial real estate segment.
On the rate front, a slew of Federal Reserve officials said they wanted to hold off on cutting interest rates until they had more confidence that inflation was headed to 2%, but that mostly echoed the recent message from Chair Jerome Powell.
Markets are still pricing in an 80% probability of a rate cut as early as May, with futures implying around 120 basis points of easing for all of 2024, down from 145 basis points late last week.
Treasuries were in a holding pattern. The yield on benchmark 10-year notes was little changed at 4.1076%, after edging slightly higher the previous day. It was still up 7 basis points for the week, reflecting the pushback from Fed on early rate cuts.
The Treasury Department’s record sale of $42 billion in 10-year notes drew strong demand, allaying some of the fears about excess supply in the market. [US/]
The dollar was trading in a tight range after recent gains, holding at 104.03 against its major peers.
Oil prices extended gains on Thursday after Israel rejected the latest offer from Hamas for a ceasefire. [O/R]
Brent rose 0.4% to $79.53 a barrel, while U.S. crude edged up 0.4% to $74.16 per barrel.
Spot gold prices flat at $2031.72.
(Reporting by Stella Qiu; Editing by Jamie Freed and Christopher Cushing)
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