Asian stocks bounce on China spending plans; inflation jolts Aussie

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SINGAPORE : China led Asia's stock markets higher on Wednesday as investors cheered the approval of a trillion-yuan sovereign bond issue as a harbinger of stimulus, while the Aussie dollar hit a two-week high as hotter-than-expected inflation lifted rate forecasts.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.9 per cent and the Hang Seng 2 per cent. Japan's Nikkei rose 1.1 per cent.

China's top parliament approved a 1 trillion yuan bond issue, state media reported adding the funds would be spent rebuilding disaster zones and improving infrastructure. Central Huijin promising ETF purchases drove rallies of more than 20 per cent in 2013 and 2015, according to UOB, and Leung said the signal had given a strong boost to sentiment.In currency markets, the euro made its steepest drop for two weeks overnight, falling 0.7 per cent 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 per cent was above forecasts of 5.3 per cent. Pricing for the odds on a rate hike next month shot to 60 per cent from 35 per cent 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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