Stimulus Bets Boost Chinese Stocks


Chinese stocks ended mostly higher on Tuesday, buoyed by expectations for additional stimulus from the People’s Bank of China after economic growth slowed to a six-year low in the third quarter.

The Shanghai Composite Index advanced 1.1% or 38.63 points to 3,425.33. The CSI 300, which tracks Chinese stocks traded in Shanghai and Shenzhen, climbed 1.2% or 43.52 points to 3,577.70.

Hong Kong’s Hang Seng Index closed down 0.4% or 86.39 points at 22,989.22.

Chinese stocks have come back strong in October as expectations for continued low-rate stimulus from the US Federal Reserve lifted investor sentiment worlwide. Chinese stocks have gained 9% since mainland markets reopened after the week-long National Day holiday on October 8.

Elsewhere in Asia, the Nikkei 225 in Tokyo climbed 0.4% or 75.92 points to 18,207.15.

Tuesday’s rally was mostly attributed to expectations that the People’s Bank of China would cut interest rates for the sixth time since last November in response to a slowing economy. China’s gross domestic product expanded 6.9% annually in the third quarter, the slowest rate since the financial crisis and just below Beijing’s official target of 7%.

A key measure of factory output also weakened in October, signaling that headwinds will persist into the fourth quarter.

Commodity prices were mixed on Tuesday after falling sharply at the start of the week. International crude oil benchmark Brent for December delivery fell 13 cents or 0.3% to $48.48 a barrel on ICE Futures Europe. The West Texas Intermediate (WTI) benchmark for US crude was virtually unchanged at $45.91 a barrel on the New York Mercantile Exchange.

In precious metals, gold prices posted a modest rally after falling below three-month highs. The December contract was up nearly $7 in intraday trade before consolidating at $1,170.60 a troy ounce.

On the currency front, the US dollar weakened on Tuesday as investors shifted their attention to the European Central Bank, which is scheduled to issue a rate statement later in the week. The US dollar index, a weighted average of the greenback against a basket of global peers, fell 0.2% to 94.73.

In economic data, US housing starts rose more than forecast in September, supporting expectations for a continued recovery in the housing market. Groundbreaking rose 6.5% to a seasonally adjusted annual rate of 1.21 million, the Commerce Department reported Tuesday. It was the sixth consecutive month housing starts remained above the 1 million unit mark.