By Ambar Warrick
Investing.com-- Chinese stocks surged from a near three-year low on Tuesday as more negative economic readings drove up hopes of stimulus measures, while broader Asian markets ticked higher ahead of a Federal Reserve meeting.
China’s blue-chip Shanghai Shenzhen CSI 300 index jumped 1.8%, while the Shanghai Composite index added 1.1%, with battered technology stocks leading gains on both indexes.
A private survey showed on Tuesday that China’s manufacturing sector shrank for a third consecutive month in October, as the economy continued to struggle with new COVID-linked disruptions. But the reading also fed expectations that the government will roll out more stimulus spending to support economic growth.
China’s main indexes slumped as much as 8% in October, as new COVID outbreaks and concerns over Beijing’s political climate dented sentiment. Local technology stocks were also walloped by a U.S. move to limit semiconductor exports to the country.
Chinese stocks now appear to be benefiting from some degree of bargain buying. But analysts have warned of more potential losses, particularly due to uncertainty over the zero-COVID policy.
Hong Kong stocks were also swept up with their Chinese peers, with the Hang Seng index rallying over 4% from a 14-year low. Major technology stocks were the biggest boost to the index.
Broader Asian markets rose on Tuesday, defying a weak lead-in from Wall Street, although most regional bourses saw a measure of bargain buying. South Korea’s KOSPI index rose 1.6% from a recent two-year low, while the Taiwan Weighted index also recovered 0.7% from a two-year low.
Focus was on the conclusion of a Federal Reserve meeting on Wednesday, where the central bank is widely expected to hike rates by 75 basis points. But markets are holding out hope that the bank will soften its hawkish stance.
Australia’s S&P/ASX 200 index rose 1.7% on Tuesday, buoyed chiefly by bank stocks after the Reserve Bank hiked interest rates. But local risk appetite also improved as the hike was much smaller than those enacted earlier this year.
But the Reserve Bank also hiked its inflation forecast for the year, and warned of slowing economic growth.