Asia Markets wrap

Hong Kong: Investor sentiment is positive amid hopes that a US stimulus package will be agreed upon as the two political sides resolve their differences, with China outperforming as additional details of GDP data released during the day showed all round improvement.

A spokesman for US House of Representatives Speaker Nancy Pelosi said that she and Treasury Secretary Steve Mnuchin “continued to narrow their differences” and that “by the end of the day Tuesday, we will have clarity on whether we will be able to pass a bill before the election”.

Earlier in the day, investor jitters about the stimulus package forced a retreat in most markets in the region with Japan’s Nikkei 225 index slipping 0.44%, Australia’s S&P ASX 200 retreating 0.72% and the MSCI Asia Pacific index falling 0.80%.

But Chinese stocks rallied as Hong Kong’s Hang Seng index edged up 0.11% and Mainland China’s CSI300 advanced 0.80%, amid upbeat assessment of the economy.

“All types of services activity showed a clear improvement, especially among the sectors hardest hit by COVID-19 such as hospitality and retail,” said Julian Evans-Pritchard, senior China economist at Capital Economics.

“Looking ahead, we think that improving labour market conditions and consumer confidence, alongside fewer constraints from COVID-19 containment measures,” he said, while adding that the service sector as a whole can return to its pre-virus growth path by early next year.

Yuan rising

The yuan continued its march rising with the People’s Bank of China (PBoC) setting central parity for the yuan with the US dollar at 6.6930, the strongest fixing since April 18, 2019. 

“A strong yuan increases the purchasing power of China abroad, which hurts the broad trade-weighted dollar, further boosts the appeal of commodities and helps global deep cyclical equities. This virtuous circle is likely to remain in place until mid-2021,” said BCA Research in a note.

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Asia Stocks

· Japan’s Nikkei 225 index slipped 0.44%

· Australia’s S&P ASX 200 retreated 0.72% 

· Hong Kong’s Hang Seng index edged up .11%

· China’s CSI300 advanced 0.80%

· The MSCI Asia Pacific index fell 0.80%.

Stock of the day

Yongda Auto rose as much as 14.3% after it said operating cash flows more than doubled in the third quarter. China’s auto industry is seeing a resurgence in demand with the sector reporting a sixth straight month of gain in sales, rebounding a solid 12.8% in September.

This report appeared initially on Asia Times Financial.

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