BANGKOK– World stocks were mixed on Tuesday, with Hong Kong and Shanghai advancing after a report showed Beijing plans to pour about 2 trillion yuan ($278 billion) into supporting ailing Chinese markets.
In early European trading, Germany’s DAX lost 0.2% to 16,651.29 and Paris’ CAC 40 fell 0.3% to 7,394.04. Britain’s FTSE 100 rose less than 3 points to 7,491.07.
The future for the S&The P 500 and the Dow Jones Industrial Average fell less than 0.1%.
An unconfirmed report from Bloomberg quoted unnamed sources as saying that China plans to tap offshore funds of Chinese state-owned companies as well as local funds to stabilize markets.
The Hang Seng in Hong Kong rose more than 3%, but fell slightly and ended the day up 2.6% at 15,353.98. The Shanghai Composite index gained 0.5% to 2,770.98.
Shanghai’s benchmark fell 2.7% on Monday, approaching its lowest level since 2019. Chinese Premier Li Qiang told a meeting of the State Council and the Chinese Cabinet that more needed to be done to improve the quality of listed companies and strengthen market supervision, financial news channel Caixing reported.
The Hang Seng is down about 12% so far this year as of Monday’s close. It got an extra boost on Tuesday from news that China’s National Press and Publications Administration had removed from its website the full text of draft rules for online gaming, which had recently caused major losses for tech companies.
A consultation period on the rules ended on Monday and it was unclear when or if a revised set of rules could be released.
Investors have retreated from Chinese markets as the country’s recovery from the shocks of the pandemic falters. Last year, Beijing posted its first quarterly deficit in foreign direct investment since the country started reporting figures in 1998.
Even if a substantial bailout helps prevent major losses, it may not be a panacea if it fails to build the confidence needed to maintain market stability, Mizuho Bank’s Tan Boon Heng said in a commentary.
“The ongoing sell-off in China is taking place despite the rally in global equities. And instead of a delayed convergence of relative shifts, the divergence with China’s reopening has only widened over time,” Tan said.
Tokyo’s Nikkei 225 index gave up earlier gains to end 0.1% lower, closing at 36,517.57. It has moved closer to its record high of 38957.44 set in December 1989, before the implosion of a financial bubble that ushered in an era of slowing growth.
Concluding a two-day policy meeting, the Bank of Japan cited “extremely high uncertainties surrounding the economies and financial markets at home and abroad” in saying it would continue its ultra-loose monetary policy, keeping interest rates at minus 0.1% would stay. .
A policy statement also said the central bank “will not hesitate to take additional easing measures if necessary.”
Speculation that the BOJ would end its negative interest rate policy, introduced to encourage spending and investment, has dragged the Japanese yen sharply lower. On Tuesday morning, the US dollar bought 147.28 yen, down slightly from 148.11 yen late Monday.
Elsewhere in Asia, South Korea’s Kospi rose 0.6% to 2,478.61 and Australia’s S&P/ASX 200 added 0.5% to 7,514.90.
Bangkok’s SET fell 0.6% and India’s Sensex lost 1.1%.
On Monday the S&P500 added 0.2%. The Dow Jones recorded a top of 38,000 points and rose 0.4% to 38,001.81. The Nasdaq composite gained 0.3%.
This week will bring a flood of companies reporting their results for the last three months of 2023, with around 70 companies from the S&P500 on the calendar. These include American Airlines, Intel and Procter & Gambling and Tesla.
On Thursday, the government will provide an initial estimate of how strong the economy has grown in the last three months of 2023.
Economists expect this will show that the economy is still growing, but at a slower pace than during the summer. That’s what the Federal Reserve wants to see, because an overly strong economy would continue to put pressure on inflation.
On Friday, the government will release the latest updates on the Fed’s preferred inflation gauge. Economists expect inflation to remain stable at 2.6% in December compared to a month earlier.
Government bond yields have fallen significantly since October on expectations of upcoming rate cuts. That, in turn, has significantly eased the pressure on the stock market and helped it move higher. Yields fell further on Monday.
The yield on the 10-year government bond was 4.13% early Tuesday, down from 4.13% at the end of Friday and 5% in October.
In other trading, benchmark U.S. crude rose 28 cents to $75.04 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, rose 26 cents to $80.32 a barrel.
The euro rose from $1.0884 to $1.0899.