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Hong Kong stocks are at their highest level in three years on the back of a positive outlook for China

Hong Kong stocks are at their highest level in three years on the back of a positive outlook for China

Hong Kong shares reached a three-year high on Tuesday and led Asian markets higher as investors turned positive about the outlook for China. Investors praised recent data, and promised to further support the consumption of the world's largest economy.

The Hang Seng gained 2%, and it has a gain of 23% for the year to date. This is by far the biggest gain in any major market.

Futures indicate that the positive mood in Europe will continue. The EUROSTOXX Futures Index rose by 0.35% while the DAX Futures Index rose by 0.43%.

During European hours, all eyes will be on Germany. Its lower house of Parliament is preparing to vote on an enormous surge in borrowing which could boost Europe's biggest economy and stimulate the growth throughout the region.

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

Short sellers covered bets on the New Zealand dollar which is sensitive to Chinese food exports and sent it to a 3-month high of $0.58295. Last seen at $0.58145, the kiwi fell 0.13%.

Early trading saw the China-sensitive Australian Dollar hit a month-high just below $0.64 before easing back to trade at 0.27% less, or $0.6368. China's Yuan was hovering near its highest levels this year.

China announced childcare subsidies on Sunday and a special action plan to boost domestic consumption. On Monday, retail sales growth in January and February was accelerated.

Trump suggested that Chinese President Xi Jinping could visit the U.S. within the next few months, raising hopes 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 interbank rate has been dropping recently. This indicates that money is 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.

Indonesia was the outlier, with Jakarta's shares falling about 7% and reaching a three-and-a-half-year low due to concerns over the tit-fortat tariffs.

Stocks on Wall Street have stabilised overnight, but sentiment remains fragile as we approach April, the month 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.

During Asian hours, gold reached a new record of $3,017 per ounce. The euro eased to $1.0905, while sterling, which had reached a four-month high overnight, was just a hair short of $1.30.

The yield on the 10-year Treasury note remained at 4,2908%.

The German Economic Survey is due in the morning, but the markets are focused on the U.S. Federal Reserve which will conclude 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 in order to end the Ukraine War. This prospect has caused European gas prices to fall and the euro's value have risen over the past few weeks. Reporting by Tom Westbrook, Editing by Shri Navaratnam & Lincoln Feast.

(source: Reuters)