Asian stocks bounce on China’s US$137bil spending plans

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Sentiment got a boost from Central Huijin’s ETF purchase, a move that sparked strong rallies in the past.

Strong corporate earnings drove Wall Street higher, while the euro and oil declined on weak European purchasing managers surveys.

Bonds have held onto a bounce-back after the 10-year Treasury yield breached 5% on Monday, with the benchmark yield firm at 4.82% in Tokyo trade. Also helping the mood was state-owned investment company Central Huijin announcing it was buying exchange-traded funds, a move which has sparked strong rallies in the past.

In currency markets, the euro made its steepest drop for two weeks overnight, falling 0.7% after the euro zone composite PMI fell deeper into contractionary territory to its lowest in three years. The annual pace of inflation in Australia slowed in the third quarter, but at 5.4% was above forecasts of 5.3%. Pricing for the odds on a rate hike next month shot to 60% from 35% before the data.

“I think commodity markets are recalibrating the geopolitical implications in the Middle East … more decisive drivers are needed for a clear direction,” said Glenn Yin, head of research at AETOS Capital Group in Melbourne.

 

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