China's red-hot rally is taking a break to wait for stimulus measures

Chinese stocks fell on Wednesday and commodities suffered sharp losses as investor enthusiasm for China's economic recovery declined, while broader markets were calmed by expectations that the US economy could avoid recession and support global demand.

The New Zealand dollar fell 0.6% after the central bank cut interest rates by 50 basis points and weighed on the economic outlook, raising the possibility of further interest rate cuts.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6% as Hong Kong stocks rose about 2% after posting their biggest decline since 2008 the previous day.

Hong Kong markets fell on Tuesday, mainland stocks fell from highs and commodities ranging from oil to metals fell, as a press conference by China's National Development and Reform Commission provided no new details on stimulus measures.

The Shanghai Composite Index and CSI300 Index fell about 3% on Wednesday.

Brent crude futures fell 4.6% overnight, reaching $77.79 per barrel at settlement. Iron ore found support at $106 in Singapore after falling 5% on Tuesday.

“While the disappointment is understandable, it seems premature and misplaced,” Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho, ​​said in a note to clients.

“The reality is that it is not the role of the National Development and Reform Commission to provide details on fiscal (or any) further monetary policy stimulus.”

Japan's Nikkei rose 1%, with shares of grocery company Seven & I Holdings jumping after Bloomberg News reported that Canadian retailer Alimentation Couche-Tard would increase its takeover bid.

Soft landing

US stock futures were broadly flat in Asia after rising strongly in spot trading overnight after a number of Federal Reserve officials made positive comments on the prospects of managing interest rates for a soft economic landing.

New York Fed President John Williams told the Financial Times that last week's stronger-than-expected September jobs report showed the economy was healthy, while lower inflation left room for interest rates to be cut over time.

Traders have trimmed their expectations that the Fed may cut rates again by 50 basis points in November and are currently anticipating an 88% chance of a 25 basis point cut.

Two-year US Treasury yields remained steady overnight after the recent selloff, at 3.96% and 10-year yields at 4.01%.

The US dollar received support from higher yields, as it rose slightly to trade at $1.0968 per euro, while settling at 148.25 yen. The Australian dollar was slightly weaker at US$0.6738, and traders assessed the Reserve Bank of New Zealand as preparing for further interest rate cuts.

At $0.6096, the New Zealand dollar was trading at a seven-week low and testing its 200-day moving average.

“While today's meeting did not include any updated forecasts and was not accompanied by a press conference, the forecasts in the decision statement appeared pessimistic, giving the RBNZ flexibility to cut interest rates again before the end of the year,” analyst Tony Sycamore said. In IG Markets.

Minutes from the Fed's September meeting, at which US interest rates were cut by 50 basis points, will be published later in the meeting, as will appearances by Fed officials Raphael Bostic, Lori Logan and Mary Daly.