Stocks showed a mixed performance in Asia on Tuesday following the announcement by China’s premier that the country’s economic growth target for this year is approximately 5%, aligning with forecasts. The benchmark index in Hong Kong declined, whereas Shanghai saw a slight increase.
During the opening session of China’s National People’s Congress, Li Qiang announced that Beijing plans to issue 1 trillion yuan ($139 billion) in long-term bonds. These bonds are intended to address funding shortfalls, assist financially struggling local governments, and invest in advanced technology as well as social support and education initiatives.
Additionally, Li stated that China’s housing program would be expanded and subsidized, which is part of a broader effort to revitalize the property market following a crackdown on excessive borrowing that led to numerous developer defaults.
While the congress serves as the largest political event of the year, its primary function is to endorse policies established by the top leaders of the ruling Communist Party.
Investors have been closely monitoring indications from China’s leaders regarding potential additional stimulus measures for the economy. Such measures aim to stimulate investment and consumer spending, ultimately fostering growth. The economy saw expansion at a 5.2% annual rate last year, rebounding from a dip to 3% growth in 2022.
The initial response to Li’s speech and the yearly budget report, issued on Tuesday, seemed subdued. The Hang Seng index in Hong Kong dropped by 2% to 16,272.77, while the Shanghai Composite index rose by 0.3% to 3,047.20.
Japan’s Nikkei 225 index saw a 0.3% increase, surpassing its previous closing record to reach 40,212.45.In Seoul, the Kospi fell by 0.6% to 2,658.78, and Australia’s S&P/ASX 200 decreased by 0.1% to 7,730.60.India’s Sensex experienced a 0.3% decline, whereas Taiwan’s Taiex saw a 0.5% gain
On Monday, the S&P 500 declined by 0.1% to 5,130.95, following its recent all-time high and its 16th consecutive winning week out of the last 18. The Dow Jones Industrial Average dropped by 0.2% to 38,989.83, and the Nasdaq composite lost 0.4% to 16,207.51.
The pace of growth for U.S. stocks decelerated after a surge fueled by optimism about easing inflation, potential interest rate cuts, and the resilience of the U.S. economy against recession forecasts. Concurrently, the hype surrounding artificial intelligence technology has propelled certain stocks to extraordinary levels.
Super Micro Computer, a provider of server and storage systems for AI and other computing purposes, experienced another significant leap of 18.6% on Monday. Over the past year, its stock has skyrocketed by nearly 1,000%.
Scheduled for Wednesday, Jerome Powell, the chair of the Federal Reserve, is set to appear before a House of Representatives committee to discuss monetary policy. While indicating that the Fed’s forthcoming action is likely to be a cut, Powell has also emphasized the necessity for additional evidence confirming a decisive decline in inflation towards the 2% target.
This statement was made prior to recent reports revealing inflation rates exceeding expectations at both the consumer and wholesale levels.
A report slated for Friday will shed light on the current state of the U.S. job market, with economists predicting a slowdown compared to the robust growth seen in January.
Additionally, several retailers, including Costco Wholesale, Gap, and Nordstrom, are set to release their latest earnings reports this week.In other retail news, Macy’s shares surged by 13.5% following a higher buyout offer from two investment firms seeking to acquire the remaining shares.
Meanwhile, on Wall Street, Spirit Airlines saw a decline of 10.8%, while JetBlue Airways experienced a 4.3% increase after their proposed $3.8 billion merger was halted by a court ruling.
Apple’s stock dropped by 2.5% after the European Union imposed a fine of nearly $2 billion for allegedly favoring its own music streaming service over competitors like Spotify.
During early Tuesday trading, U.S. benchmark crude oil dropped by 33 cents to $78.41 per barrel on the New York Mercantile Exchange in electronic trading. Meanwhile, Brent crude, the international standard, decreased by 21 cents to $82.59 per barrel.
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