(Bloomberg) — European stock futures and Hong Kong shares advanced after more stimulus measures from China sparked a risk-on mood. Oil rose and gold hovered near a record after tensions flared up in the Middle East with Iran firing a barrage of missiles at Israel.
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An index of Chinese equities soared as much as 8.4%, the most since November 2022, as it headed for a 13th straight winning session. Chinese property stocks extended gains on Wednesday after Beijing followed other major cities in China in relaxing home purchase rules. Brokerage shares also advanced.
Equities in Japan, Australia and South Korea, as well as US equity futures, declined following Tehran’s sharp but brief strike in reprisal for Israel’s attacks on Lebanon in recent days. The Israel Defense Forces said many of the missiles had been intercepted as Prime Minister Benjamin Netanyahu vowed to retaliate.
A risk-off mood gripped markets Tuesday as geopolitical tensions racheted up in the Middle East and as traders await further clarity over Israel’s response. The flight to safety sent oil, haven assets higher and US stocks lower. Meanwhile, Chinese shares overcame cautious risk sentiment, extending a stimulus-induced rally as traders returned from a public holiday, driven by optimism about China’s economy and attractive valuations.
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“We have to bear in mind that Hong Kong and China have been underweight or underexposed for a while now so it won’t be that sensitive to short-term market events such as geopolitics,” said Billy Leung, an investment strategist at Global X Management in Sydney. The move also reflects two days of market action as traders came back from holiday, he said.
Markets in mainland China remain shut for Golden Week. The Taiwanese stock market is also closed as Super Typhoon Krathon approaches the island.
Treasury yields ticked higher after dropping on Tuesday, with the 10-year hovering around 3.74%.
Australian and New Zealand dollars strengthened, lifted by export demand, as the euphoria for China’s stock rally spread to other assets in the region. Copper rose for a second day as traders anticipated positive flow-on effects from China’s latest economic stimulus measures, which have propelled gains across commodities.
The Middle East conflict drove Wall Street’s fear gauge — the VIX — higher on Tuesday, touching a key level that usually indicates more market swings are in store. Australian and New Zealand government bonds rose, along with Asian defense and energy shares.
In corporate news, Samsung Electronics Co. is laying off workers as part of a plan to reduce global headcount by thousands of jobs.
Elsewhere, South Korea’s inflation slowed more than expected, supporting the case for a pivot to monetary easing by the central bank when it sets policy next week. Meanwhile, euro-area inflation slowed below the European Central Bank’s 2% target for the first time since 2021, prompting money markets to add to bets on another quarter-point decrease by the ECB this month.
In political news, Republican JD Vance largely succeeded in sanding down his hardline reputation, while Democrat Tim Walz’s nerves were on display as the vice presidential candidates battled over immigration, abortion, and climate change during Tuesday’s debate.
Key events this week:
S&P Global Manufacturing PMI on Wednesday
Fed speakers include Richmond’s Thomas Barkin, Cleveland’s Beth Hammack, St. Louis’s Alberto Musalem and Fed Governor Michelle Bowman on Wednesday
US nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.3% as of 6:50 a.m. London time
Nasdaq 100 futures fell 0.4%
Futures on the Dow Jones Industrial Average fell 0.3%
The MSCI Asia Pacific Index was little changed
The MSCI Emerging Markets Index rose 0.9%
Japan’s Topix fell 1.6%
Australia’s S&P/ASX 200 fell 0.2%
Hong Kong’s Hang Seng rose 4.3%
Euro Stoxx 50 futures rose 0.1%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.1059
The Japanese yen was little changed at 143.63 per dollar
The offshore yuan was little changed at 7.0244 per dollar
The British pound fell 0.2% to $1.3265
Cryptocurrencies
Bitcoin rose 1.1% to $61,430.87
Ether rose 1.1% to $2,477.22
Bonds
The yield on 10-year Treasuries was little changed at 3.73%
Germany’s 10-year yield declined nine basis points to 2.04%
Britain’s 10-year yield declined six basis points to 3.94%
Japan’s 10-year yield declined 3.5 basis points to 0.815%
Australia’s 10-year yield declined six basis points to 3.95%
Commodities
Spot gold fell 0.6% to $2,646.90 an ounce
West Texas Intermediate crude rose 1.8% to $71.06 a barrel
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rob Verdonck.
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