Hong Kong (AFP) – Asian markets rallied on Wednesday as investors welcomed China’s economic targets, which they hope will offset the impact of a global trade war. Global stocks had tumbled Tuesday after China, Mexico, and Canada hit back at US tariffs, and fears grew that Europe could be President Donald Trump’s next target.
Investors welcomed China’s economic targets for the coming year on Wednesday as the government began its annual meeting of the National People’s Congress. China set an annual growth target of around five percent, vowing to make domestic demand its main economic driver. Beijing also announced a rare hike in fiscal funding, allowing its budget deficit to reach four percent this year. It comes alongside a pledge to create 12 million new jobs in China’s cities and a push for two percent inflation this year. The world’s second-largest economy is also planning to increase defense spending by 7.2 percent, the same as last year.
However, observers have tempered expectations for the stimulus given that China is facing strong economic headwinds. These include a persistent property sector debt crisis, stubbornly low consumer demand, and stuttering employment for young people. “We remain sceptical that it will be sufficient to prevent growth from slowing this year, especially given the headwinds on the external front and the lack of a more pronounced shift in government spending towards support consumption,” said Julian Evans-Pritchard, head of China economics at Capital Economics.
US tariffs, which are expected to hit hundreds of billions of dollars in total trade between the United States and China, also weighed on investors’ minds. Trump signed an executive order on Monday to increase a previously imposed 10 percent tariff on Chinese goods to 20 percent. China responded by saying it would impose levies of 10 and 15 percent on a range of US agricultural imports.
“There’ll be a little disturbance, but we’re okay with that. It won’t be much,” Trump said on Tuesday during his first address to a joint session of Congress since returning to the White House. Kathleen Brooks, research director at XTB trading platform, said more US tariffs were on the horizon. “More tariffs are expected from the US in the coming weeks, including for the EU and reciprocal tariffs, which could keep investors on edge in the short term,” said Brooks.
Hong Kong and Jakarta outperformed Wednesday, climbing more than two percent, while Seoul, Taipei, Bangkok, and Manila were also up around one percent. Tokyo and Shanghai saw modest gains along with Kuala Lumpur and Singapore, while Sydney and Wellington dropped around 0.5 percent. Hong Kong firm CK Hutchison rose above 20 percent after the company agreed to sell its lucrative Panama Canal ports to a US-led consortium under fierce pressure from Trump.
– Key figures around 0700 GMT –
Tokyo – Nikkei 225: UP 0.23 percent at 37,418.24 (close)
Hong Kong – Hang Seng Index: UP 2.67 percent at 23,555.24
Shanghai – Composite: UP 0.53 percent at 3,341.96 (close)
Euro/dollar: UP at 1.0641 from 1.0485 on Tuesday
Pound/dollar: UP at $1.2807 from $1.2694
Dollar/yen: UP 149.75 from 149.32 yen
Euro/pound: UP at 83.09 pence from 82.60 pence
West Texas Intermediate: DOWN 0.50 percent at $67.92 per barrel
Brent North Sea Crude: DOWN 0.03 percent at $71.03 per barrel
New York – Dow: DOWN 1.6 percent at 42,520.99 (close)
London – FTSE 100: DOWN 1.3 percent at 8,759.00 (close)
© 2024 AFP
