By Gina Lee
China’s Shanghai Composite edged down 0.17% by 9:57 PM ET (1:57 AM GMT) while the Shenzhen Component edged down 0.20%. Although investors breathed a sigh of relief as concerns over China Evergrande’s debt woes receded somewhat, it remains unclear if and how the developer will pay the more than $300 billion of liabilities that it owes. It also remains unclear how authorities will react to any potential default.
Hong Kong’s Hang Seng index fell 0.64%.
Japan’s Nikkei 225 jumped 1.73% after returning from a holiday. Data released earlier in the day said that the national core consumer price index (CPI) grew 0% year-on-year in August. The national CPI contracted 0.4% year-on-year and 0.2% month-on-month respectively.
The data also showed that the manufacturing purchasing managers index (PMI) for September was 51.2.
Investors were also optimistic that the U.S. Federal Reserve’s decision to start hiking interest rates in 2022 was a sign of confidence in the economic recovery from COVID-19. The central bank handed down its latest policy decision on Wednesday.
Clarity from the Fed has allowed risk assets to flourish, Loomis Sayles & Co. portfolio manager Elaine Stokes told Bloomberg.
“What they did is tell us that they feel really good about the economy.”
Fed Chairman Jerome Powell, Governor Michelle Bowman and Vice Chairman Richard Clarida are due to discuss the economic recovery from COVID-19 later in the day.
However, should inflationary pressures continue, it will pose a risk to investors’ optimism if it reduces confidence in this economic recovery.
Across the Atlantic, the Bank of England (BOE) kept its interest rate unchanged at 0.10% as it handed down its policy decision on Thursday. BOE did keep the possibility of an interest rate hike in 2021 open, which pushed down 10-year gilts.
Asian Stocks Down as China Evergrande Crisis Not Over Yet
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