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China just saved Asia stocks from entering bear-market territory


[SINGAPORE] It's been a day of swings between losses and gains for Asian stocks. But now that China and Hong Kong are back with a vengeance, the regional benchmark is inching higher in the green.

Asia's main equity gauge, which was poised to succumb to bear market territory earlier, is now up 0.3 per cent as at 12.45pm in Singapore as the indices for China and Hong Kong rallied by the mid-day trading break. Even US stock-index futures have flipped into a slightly higher region.

It's worth noting that Chinese stocks might be in a bit of a "one step forward, two steps back" mode as the market holds on to its title of world's wildest market. While there have been some days of solid rallies over the past couple of months, the Shanghai Composite Index is still down about 20 per cent since the end of December. The only caveat is that China's national team might just be waking up to heavier support for the rest of the year.

First a recap on what happened overnight:

Expectations for a one-on-one meeting between US President Donald Trump and China's Xi Jinping are already being lowered, with officials from both sides increasingly pessimistic about prospects for a resolution to their deepening trade war.

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Mr Trump criticised the conflicting accounts from Saudi Arabia and said he's passing responsibility to Congress for responding to the killing of Jamal Khashoggi.

Fed's Raphael Bostic said he supports further gradual interest-rate hikes and warned of running the economy hot.

Mr Trump stepped up his attacks on Fed's Mr Powell and said he "maybe" regrets appointing him to the post, The Wall Street Journal reported citing an interview with the president.

The rolling bear market in US equities is getting hard to shake off after Caterpillar Inc slumped as it held to its earlier 2018 outlook that disappointed analysts.

Some strategists are suggesting investors hold on to cash.

Tech stocks in Asia were literally flat as shares of chip companies fell after Texas Instruments Inc gave disappointing guidance.

Where to from here? Earnings season will be key. All eyes will be on US tech stocks this week as companies including Inc, Google's Alphabet Inc, Twitter Inc and Microsoft Corp are scheduled to report this week.

Everywhere else in Asia, stock markets are seeing modest gains. In India, the S&P BSE Sensex climbed, propelled by the steepest oil drop in three months. Japan's Topix index fluctuated as explorers of crude slid and electronics stocks rose.

Japan investors may be waiting for earnings to kick into full gear - the ratio of short bets on shares traded on the Tokyo Stock Exchange climbed to a record of 50.8 per cent as the Topix closed on Tuesday at its lowest level since September 2017.


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