Most Asian markets saw modest gains on Monday, though Chinese stocks were notably volatile following mixed signals from Beijing regarding its plans for fiscal stimulus. This comes as recent inflation data from China fell short of expectations.
Trading activity across the region was subdued, partly due to a market holiday in Japan.
Asian stocks took their cues from Wall Street, where both the S&P 500 and the Dow Jones reached record highs on Friday, supported by strong earnings reports from major U.S. banks. Investors this week will be focused on more third-quarter earnings and speeches from several Federal Reserve officials.
China’s Markets Swing as Investors Weigh Stimulus and Inflation
Chinese markets saw sharp fluctuations, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes both rising as much as 2% in early trading, only to trim their gains and end about 0.2% higher by 02:05 GMT.
Over the weekend, China’s finance ministry announced plans to introduce new fiscal stimulus measures, including increased debt issuance and additional support for provincial governments. However, the lack of specifics regarding the timing and scale of these measures left investors cautious.
ANZ analysts commented that the proposed measures would “significantly increase government debt,” sparking concerns about Beijing’s ability to introduce large-scale fiscal stimulus given its already high debt levels.
Economic indicators from China continued to show signs of weakness, with consumer inflation unexpectedly declining in September and producer inflation shrinking for the 23rd consecutive month.
Hong Kong markets reflected the mixed sentiment towards China, with the Hang Seng Index dropping more than 2% amid volatile trading.
Although Chinese stocks had posted strong gains in recent weeks following a new round of monetary stimulus in late September, the rally has stalled due to the lack of concrete details on further fiscal plans. Investors are also awaiting new trade data from China, due later on Monday, for more economic insights.
Broader Asian Markets Follow Wall Street Gains
Elsewhere in Asia, broader markets edged higher, tracking gains from Wall Street’s positive session. Australia’s ASX 200 rose by 0.4%, buoyed by the potential for increased Chinese stimulus, as China remains Australia’s largest trading partner.
Meanwhile, Nikkei 225 futures dipped by 0.4%, as Japanese markets were closed for a national holiday.
South Korea’s KOSPI added 0.4%, while futures for India’s Nifty 50 index pointed to a negative start, with the index struggling to stay above the 25,000 mark. India is also set to release its consumer inflation data later in the day, which is expected to show a significant rise for September.
