Berliner Boersenzeitung - Shanghai stocks soar to extend stimulus rally amid Asia-wide drop

Equities in Shanghai and Shenzhen opened more than 10 percent higher, extending the massive gains chalked up before the Golden Week holiday amid hopes for more "bazooka" measures from Beijing.

However, big losses in Hong Kong led the rest of Asia lower after a sell-off on Wall Street where investors cut back their bets on the Federal Reserve announcing a second bumper interest rate cut this month.

Investors have been racing back into mainland and Hong Kong stocks since authorities last month began announcing a raft of stimulus measures to reverse a long period of tepid economic growth.

Among the measures unveiled were interest rate cuts, an easing of how much banks must keep in reserve and relaxed rules on buying a home.

The markets have been under intense pressure in recent years as traders fretted over government crackdowns on multiple sectors, with property and tech among those most badly affected.

Most of the pledges were aimed at providing much-needed support to the real estate market, which is a major driver of growth but has been battered by a debt crisis at some of the country's biggest developers.

"We think the market surge is due to the prevailing belief that there's been a strong political push for the upcoming stimulus to make actual changes, since it comes as a coordinated push," said Heron Lim at Moody's Analytics.

"While details are still few, if the spending is indeed at 2 trillion yuan ($283.5 billion) as media reports suggest, they’d represent the biggest support programme since the pandemic; and the spending is reportedly set to target the areas of the economy that need it most.

"But the devil's in the details, and the market has to see both details and the speed of execution of the stimulus at the minimum to maintain the optimism currently seen in the stock market."

The gains in China come ahead of a planned news conference where policymakers are expected to flesh out their plans, and Alicia Garcia Herrero, chief economist for the Asia-Pacific region at Natixis, said the government needed to introduce structural reforms.

After the initial burst higher at the open, Shanghai was up more than six percent -- near highs not seen since 2021 -- and Shenzhen more than nine percent.

However, Hong Kong dived more than six percent after Wall Street's three main indexes closed down around one percent or more after data Friday showing a forecast-busting jump in US jobs creation dealt a blow to hopes for a second successive 50-basis-point rate cut.

While the news soothed any worries that the economy could be in danger of slipping into recession, the prospect of borrowing costs coming down slower than thought led to some investors cashing out after last week's record highs.

Close attention will be paid to US consumer prices Thursday and producer prices the following day.

Sydney, Seoul, Singapore, Taipei, Wellington, and Manila were all in the red.

The losses in New York were also sparked by a surge in oil prices, with Brent breaking $80 for the first time since August, as Middle East tensions and bets on China's economy stoke demand bets.

Crude has experienced recent volatility, with Brent slumping below $70 last month on concerns about weak demand before intensified fighting in the Middle East sent prices soaring 10 percent past week.

All eyes are now on Israel and its response to Iran's missile barrage last week that further fanned tensions and concerns of a regional conflict.

- Key figures around 0210 GMT -

Shanghai - Composite: UP 6.6 percent at 3,555.11

Hong Kong - Hang Seng Index: DOWN 6.17 percent at 21,674.75

Tokyo - Nikkei 225: DOWN 1.1 percent at 38,909.47

West Texas Intermediate: DOWN 0.5 percent at $76.73 per barrel

Brent North Sea Crude: DOWN 0.6 percent at $80.45 per barrel

Dollar/yen: DOWN at 147.84 from 148.13 yen on Monday

Pound/dollar: UP at $1.3098 from $1.3084

Euro/dollar: UP at $1.0984 from $1.0973

Euro/pound: UP at 83.87 pence from 83.86 pence

New York - Dow: DOWN 0.9 percent at 41,954.24 (close)

London - FTSE 100: UP 0.3 percent at 8,303.62 (close)

(K.Müller--BBZ)