Asian markets experienced a significant uptick on Friday, led by gains in Hong Kong and Shanghai, following news that China’s economic growth surpassed expectations. The positive sentiment was fueled by government officials signaling new measures aimed at bolstering the world’s second-largest economy.
Chinese Economic Growth: China’s gross domestic product (GDP) expanded by 4.6% in the third quarter, slightly exceeding forecasts. However, this still represents the slowest growth rate since the beginning of 2023.
Government Support Measures: The People’s Bank of China introduced a facility to increase liquidity and support share buybacks. Officials are also considering further cuts to reserve requirements for commercial banks.
Retail Sales and Industrial Output: Data revealed that retail sales and industrial output in China rose more than expected in September, offering a glimpse of recovery amid economic challenges.
Stock Market Performance: Following the announcements, shares in Hong Kong and Shanghai surged, with significant gains seen in tech companies and real estate developers. However, the enthusiasm was tempered by disappointing details from three high-level briefings that failed to meet investors’ expectations, leading to some profit-taking later in the day.
Other Asian Markets: Tokyo’s market benefited from a weaker yen, and Taipei saw a substantial rise thanks to TSMC’s strong earnings report. Gains were also noted in Bangkok, Jakarta, Mumbai, Manila, Singapore, and Wellington, while Seoul and Sydney experienced slight declines.
Gold Prices: Gold surged to a record high of $2,714.10 per ounce, driven by geopolitical uncertainties, particularly in the Middle East.
Geopolitical Tensions: The ongoing conflict involving Israel and Hamas, compounded by tensions with Hezbollah, has heightened demand for gold as a safe-haven asset amid fears of a broader regional conflict.
U.S. Market Reaction: Wall Street had a quiet day, despite better-than-expected U.S. retail sales data, which led investors to reduce expectations for Federal Reserve interest rate cuts. This shift strengthened the dollar against both the yen and euro.
European Market Movements: The European Central Bank’s recent rate cut added pressure on the euro, although Paris and Frankfurt saw some gains.
Friday’s rally in Asian markets reflects a mix of positive economic data from China and a global environment marked by uncertainty. The record rise in gold prices underscores the current demand for safe-haven assets amid geopolitical tensions, indicating that investors remain cautious while seeking stability in their portfolios. As the situation evolves, markets will continue to react to new data and geopolitical developments.
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