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Hong Kong stocks and the Kiwi rise on China outlook

Hong Kong stocks and the Kiwi rise on China outlook

Hong Kong shares reached a three-year-high on Tuesday and led Asian markets higher as investors turned positive about the outlook for the second-largest economy in the world and praised recent data. They also cheered promises to support further consumption.

The Hang Seng gained 2% this morning and has a gain of 23% for the year. This is by far the biggest gain among major markets.

Short sellers covered bets on the New Zealand dollar. The New Zealand Dollar is sensitive to China’s consumer through food exports. It reached a three-month peak of $0.5827.

The China-sensitive Australian Dollar hit a month-high just below $0.64, and the Chinese Yuan was hovering near its highest levels for this year.

The OECD predicted that President Donald Trump’s increased tariffs would slow down the growth of Canada, Mexico, and the U.S.A. while increasing inflation.

China is the unlikely winner from Trump's flurry of tariffs and government spending cuts in his first two month in office. Investors are fleeing to other countries due to fears of an American slowdown.

Nick Ferres is chief investment officer of Vantage Point Asset Management, a Singapore-based asset management firm.

China announced childcare subsidies on Sunday and a special action plan to boost domestic consumption. On Monday, data showed that retail sales growth had accelerated in January and February. Trump stated that Chinese President Xi Jinping could visit the U.S. within the next few months, which would further raise expectations of a breakthrough deal to reduce tariffs.

Hong Kong's dollar is in the stronger half of the trading band compared to the dollar, and Hong Kong's interbank rates are falling. This indicates that money has been pouring into this financial hub.

Mainland shares saw modest gains while MSCI’s broadest Asia-Pacific stock index rose 1%. Markets in Seoul, Sydney, and Taipei were also up.

Nikkei 225, the Japanese stock market index, rose 1.5%. This is its biggest gain in three weeks.

The mood on Wall Street is still fragile as we approach April when Trump's reciprocal tariffs will be implemented.

Gold prices continued to rise as the U.S. dollar, and U.S. yields fell due to softer-than-expected retail and factory sales figures.

In the morning of Asia, gold reached a new record at $3.005 per ounce. The euro remained above $1.09, and sterling, after reaching a four-month high overnight, was just a hair away from $1.30.

The yield on the 10-year Treasury note remained at 4,293%.

The German Economic Survey is due in the morning, but the markets are focused on the U.S. Federal Reserve which concluded a two-day session on Wednesday and on the outcome of the phone call between Trump, the Russian President Vladimir Putin and their respective Federal Reserve officials.

Trump has said that he will talk to Putin about the end of the Ukraine war. This prospect has driven down European gas prices, and the euro has rallied in recent weeks.

(source: Reuters)