Stock market today: Asian shares are mixed as China unveils 5% economic growth target for 2024

BEIJING — Stock markets in Asia were mixed on Tuesday after China’s prime minister said the country’s target for economic growth this year is around 5%, in line with expectations.

Hong Kong’s benchmark fell, while Shanghai moved higher.

Li Qiang, speaking at the opening meeting of China’s National People’s Congress, also said Beijing would issue 1 trillion yuan ($139 billion) in long-term bonds to help bridge financing gaps, provide support to financially strapped local governments and invest in both advanced technology as well as in the field of social support and education.

Li also said China would expand government-subsidized housing, part of a program aimed at reversing a downturn in the property market after a crackdown on excess lending left dozens of developers defaulting on their debts.

But the government’s intention to keep the budget deficit at 3% of China’s GDP disappointed investors hoping for more aggressive action, Stephen Innes of SPI Asset Management said in a commentary.

“The unchanged target of 3% was below expectations and indicated a cautious approach to fiscal policy,” he said.

The congress is the biggest political event of the year, although it mainly endorses the policies of the top leaders of the ruling Communist Party.

China’s economy grew at an annual rate of 5.2% last year, after growth fell to 3% in 2022.

Initial reaction to Li’s speech and the annual budget report, also released on Tuesday, seemed lukewarm. Hong Kong’s Hang Seng index lost 2.7% to 16,153.97 and the Shanghai Composite index rose 0.3% to 3,047.79, barely moving for most of the day.

Japan’s Nikkei 225 index ended flat at 40,097.63, just below Monday’s record high.

In Seoul, the Kospi fell 0.9% to 2,649.40, while the Australian S&The P/ASX 200 fell 0.2% to 7,724.20.

India’s Sensex fell 0.3%, while Taiwan’s Taiex gained 0.4%.

On Monday the S&The P 500 fell 0.1% to 5,130.95, moving above its latest all-time high and its 16th winning week in the last 18. The Dow Jones Industrial Average fell 0.2% to 38,989.83, and the Nasdaq composite lost 0.4% to 16,207.51.

Momentum for U.S. stocks slowed from their louder roar on excitement that inflation appears to be cooling, that rate cuts are on the way and that the U.S. economy has so far brushed aside predictions for a recession. At the same time, the frenzy surrounding artificial intelligence technology has catapulted some stocks to stratospheric heights.

Super Micro Computer, which sells server and storage systems used in AI and other computer systems, rose another 18.6% on Monday. The price has risen by almost 1,000% over the past twelve months.

The poster child for AI mania is Nvidia, whose chips are driving much of the move to AI. On Monday, yields rose another 3.6%, taking year-to-date gains to 72.1%, after more than tripling in 2023.

Such outbursts are amplified by a rise in profits and expectations that the boom will continue, but they also raise concerns about a possible bubble.

Several events planned this week could disrupt the market.

On Wednesday, Federal Reserve Chairman Jerome Powell will testify before a House committee on monetary policy. He has said the Fed’s next step will likely be a cut, but he also says more evidence is needed that inflation is definitely falling toward the 2% target. That was before reports recently showed that inflation at both consumer and wholesale levels was higher than expected.

A report on Friday will show how the US labor market is faring, with economists predicting a slowdown following January’s strong growth.

Several retailers will also offer their latest earnings reports this week. These include Costco Wholesale, Gap and Nordstrom.

Another retailer, Macy’s, rose 13.5% after two investment firms increased their bids to buy the shares they don’t already own.

Elsewhere on Wall Street, Spirit Airlines lost 10.8%. JetBlue Airways is terminating their proposed $3.8 billion combination after a court ruling blocked their merger. JetBlue rose 4.3%.

Apple fell 2.5% after the European Union fined the company nearly $2 billion for unfairly favoring its own music streaming service over Spotify and other rivals.

In other trading early Tuesday, U.S. benchmark crude lost 43 cents to $78.31 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, fell 35 cents to $82.45 a barrel.

The US dollar fell from 150.53 yen to 150.49 Japanese yen. The euro also fell, from $1.0856 to $1.0851.