A barometer of Hong Kong-listed Chinese enterprises rose as much as 4%, coming within 1% of erasing all year-to-date losses. The CSI 300 Index of mainland stocks increased by 2.2%. Property developers led the gains as banks increased lending support for the ailing industry. A new ban on quant funds’ trading has also alleviated fears about short selling.
That contrasts with losses in other Asian markets, including Japan, South Korea, and Australia, after the Nasdaq 100 plummeted about 1% and the S&P 500 plunged below 5,000 on Tuesday. The spotlight is on the earnings of chipmaker Nvidia Corp. and the Federal Reserve’s latest policy meeting minutes, which are coming later Wednesday. Contracts for US stocks fell.
“AI hype has deflated a bit and there may be some rotation within north Asia to China, which is still seeing post holiday cheer from relatively better consumer spending data, while market stabilisation measures are still ongoing,” Marvin Chen, an analyst at Bloomberg Intelligence, told Bloomberg.
Meanwhile, shares of HSBC Holdings Plc plummeted as high as 3.8% in Hong Kong after the bank announced an 80% drop in fourth-quarter earnings. Aluminium soared on expectations that a new round of US sanctions against Russia might target the commodity, possibly affecting supplies.
The dollar remained stable, and 10-year Treasury rates were little changed in Asian trading, but continued bearishness over China’s steel demand drove iron ore to a three-month low.
In Japan, the Nikkei 225 has lost momentum and is now farther away from achieving its all-time high of 38,915.87 in 1989. Nonetheless, macro and stock hedge funds are betting on Japan this year, expecting the central bank to change its policies after eight years of negative interest rates. The yen remained stable at 150 per dollar as the country’s exports increased more than predicted in January.
The present earnings season has so far supported the perception that Corporate America is doing well, while the “Magnificent Seven” megacaps have had a mixed reporting period. Among other headlines from the US day, Walmart Inc. rose after reporting excellent results, while Palo Alto Networks Inc. fell in late trade after lowering its revenue outlook for the year.
Some traders chose to lock in profits ahead of Nvidia’s results, while the market also considered a rumour that Microsoft Corp. is building a networking card to compete with the chipmaker’s offering.
The artificial-intelligence fever has lifted equities tied to the technology, and Nvidia is one of the few companies that has seen significant revenue growth from AI.
The Fed’s January meeting minutes are also due on Wednesday, giving traders additional information about where officials stand on a rate-cutting path. Faster-than-expected inflation this week raised fears that the Fed may not begin decreasing interest rates as quickly — or by as much — as market investors had anticipated this year.