Risk assets across Asia are enjoying a rare moment in the sun on Thursday, buoyed by a rebound in Chinese stocks, higher crude prices and a sizeable cash injection into China’s financial system from the PBOC.
As usual, most of the attention has been on Chinese markets, particularly the renminbi and stocks.
After opening the session down almost 2%, the benchmark Shanghai Composite index ripped higher into the mid session break, finishing the morning session up 0.51%. The sudden turnaround on the benchmark index has been mirrored by other mainland indices with gains ranging from 0.63% to over 1% for the tech-heavy Chinext.
A sizeable liquidity injection from the PBOC into China’s financial system – 400 billion yuan in the form of 7 and 28-day repos – has no doubt assisted in the markets turnaround.
It was the largest amount seen in the past three years.
Although offshore yuan has continued to weaken – USD/CNH is currently up 0.08% at 6.6062 – it has not impacted sentiment for the moment.
As it has done so for the past two weeks, the PBOC continued to fix the onshore yuan rate below its last traded level. On Thursday the USD/CNY rate was set at 6.5585, slightly higher than Wednesday’s fixing level of 6.5578 but well below the last traded price of 6.5785.
The relative calm in Chinese markets has allowed risk assets across the region a rare moment of reprieve.
All major stock indices across the region are trading higher, although all are off their sessions highs. Most have also failed to recover the steep losses seen on Wednesday.
Like stocks, higher-yielding currencies are trading higher although they too have given back most of their earlier gains.
The New Zealand and Australian dollars are currently up by just over 0.1%, having been higher by 0.5% earlier in the session. Reflective of improved risk sentiment, the Japanese yen has also weakened modestly.
Having played a large role in the risk rout seen on Wednesday, crude futures are also trading higher. Front-month Brent futures are up just over 1%, outpacing a smaller 0.9% lift in WTI.
Here’s the Asia market scoreboard as at 3pm AEDT.
Stocks
- ASX 200 4892.30 , 50.77 , 1.05%
- Nikkei 225 16542.12 , 125.93 , 0.77%
- Shanghai Composite 2991.78 , 15.09 , 0.51%
- Hang Seng 19016.14 , 129.84 , 0.69%
- KOSPI 1855.73 , 10.28 , 0.56%
- Straits Times 2560.62 , 0.85 , 0.03%
- S&P 500 Futures 1866.25 , 11.25 , 0.61%
Forex
- USD/JPY 117.19 , 0.28 , 0.24%
- USD/CNH 6.6062 , 0.0050 , 0.08%
- AUD/USD 0.6914 , 0.0008 , 0.12%
- NZD/USD 0.6437 , 0.0008 , 0.12%
- AUD/JPY 81.03 , 0.29 , 0.36%
- EUR/USD 1.0885 , -0.0004 , -0.04%
- GBP/USD 1.4174 , -0.0016 , -0.11%
- USD INDEX 99.162 , 0.0710 , 0.07%
Commodities
- Gold $1,099.36 , -$1.26 , -0.11%
- Silver $14.16 , $0.00 , 0.02%
- WTI Futures $28.61 , $0.26 , 0.92%
- Copper Futures ¥35,060 , -¥50 -0.14%
- Iron Ore Futures ¥316.00 , -¥3.00 , -0.94%
10-Year Bond Yields
- Australia 2.695%
- New Zealand 3.260%
- Japan 0.217%
- Germany 0.486%
- UK 1.617%
- US 2.010%
As reported by Business Insider