Asian Stocks Advance Amidst Optimism Over China's Private Sector Support

Market Summary

Asian equity indices witnessed notable gains, with Hong Kong outperforming after a meeting between Chinese President Xi Jinping and business leaders fueled expectations of enhanced support for private entities.

Key Developments

* Regional equity benchmarks reached their highest levels since early November.
* Australian stocks extended losses following the central bank's rate reduction.
* The U.S. dollar strengthened against all G-10 currencies.
* U.S. Treasury 10-year yields rose 3 basis points to 4.5%.
* Recent economic data supports holding interest rates steady, according to Federal Reserve Governor Christopher Waller.
* Xi's meeting with corporate leaders, including Alibaba's Jack Ma, raised hopes of a softened stance towards the private sector.
* DeepSeek's AI breakthrough has contributed to a $1 trillion surge in Chinese stocks.

Hong Kong Market Performance

Hong Kong technology stocks rallied, reaching a three-year high driven by DeepSeek's impact. Alibaba and Xiaomi led the gains in the Hang Seng China Enterprises Index.

China's Economic Outlook and Corporate Support

President Xi's meeting with industry leaders signals a potential departure from the previous crackdown on private businesses. Beijing's support aims to mitigate the potential impact of U.S. tariffs on the Chinese economy.

Market Expectations

Economist Hao Hong emphasizes the need for sustainable growth models to ensure long-term market stability.

Global Economic Data and Policy

Fed Governor Waller indicated that 2023 inflation trends may allow for rate cuts later in the year.
* Australia's central bank remains cautious on easing after lowering the official cash rate.
* OPEC+ is considering delaying oil output increases while Ukrainian drones disrupt Russian crude production.

Upcoming Economic Events

Key events to watch this week include:

* Singapore budget announcement
* UK unemployment and jobless claims
* Bank of England Governor Bailey's speech
* New Zealand rate decision
* US FOMC meeting minutes and housing starts data
* Eurozone consumer confidence and manufacturing/services PMI

Market Movements

Stocks:

* S&P 500 futures: +0.2%
* Topix: +0.6%
* S&P/ASX 200: -0.6%
* Hang Seng: +2.1%
* Shanghai Composite: +0.3%

Currencies:

* Dollar Spot Index: +0.2%
* Euro: -0.2%
* Japanese Yen: -0.4%
* Offshore Yuan: -0.1%

Cryptocurrencies:

* Bitcoin: -0.2%
* Ether: -2.2%

Bonds:

* 10-year Treasury yield: +4 basis points
* 10-year Japanese yield: +1.5 basis points
* 10-year Australian yield: unchanged

Commodities:

* WTI crude: +0.9%
* Spot gold: +0.4%