Asian stocks recover on China spending plans; inflation jolts Aussie

China's top parliament approved a 1 trillion yuan ($137 billion) bond issue, state media reported, adding the funds would be spent rebuilding disaster zones and improving infrastructure.

China's blue-chip CSI300 index, which had been pinned near four-year lows, rose 0.5 per cent. (Image credit: Reuters)

China helped Asian stocks rise from 11-month lows on Wednesday as investors cheered the approval of a trillion-yuan sovereign issue as a harbinger of stimulus, while the Aussie dollar jumped after hotter-than-expected inflation lifted rate forecasts. MSCI's broadest index of Asia-Pacific shares outside Japan, which hit its lowest since last November on Tuesday, rose 0.6 per cent and the Hang Seng climbed more than 1 per cent. Japan's Nikkei rose 1.2 per cent.

U.S. Treasuries held onto a bounce-back after the 10-year yield breached 5 per cent on Monday, with the benchmark yield firm at 4.82 per cent. Shares in Google parent Alphabet fell 6 per cent in after-hours trade on investors' disappointment at its slowing cloud business, while Microsoft shares rose nearly 4 per cent - leaving Nasdaq 100 futures 0.4 per cent lower in Asia trade.

European stock futures were steady, while oil and the euro were weighed by Tuesday's weaker-than-forecast purchasing managers surveys on the continent. Eurozone lending data and a German business survey are due later in the session.

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China's blue-chip CSI300 index, which had been pinned near four-year lows, rose 0.5 per cent.

China's top parliament approved a 1 trillion yuan ($137 billion) bond issue, state media reported, adding the funds would be spent rebuilding disaster zones and improving infrastructure.

Also helping the mood was state-owned investment company Central Huijin announcing it was buying exchange-traded funds, a move which has sparked strong rallies in the past.

"Government expenditure will help the economy to stabilise further and strengthen growth in the fourth quarter," said Steven Leung, executive director of institutional sales at broker UOB Kay Hian in Hong Kong.

Central Huijin promising ETF purchases drove rallies of more than 20 per cent in 2013 and 2015, according to UOB, and Leung said the signal had given a strong boost to sentiment. Hong Kong leader John Lee also said stock-trading duties and some property stamp duties would be cut in his annual policy statement.

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In currency markets, the euro nursed losses at $1.0601, having dropped when the euro zone composite PMI fell deeper into contractionary territory.

The yen sat at 149.84, perhaps steadied by the persistent selling pressure that is driving rock-bottom Japanese yields a little higher. Ten-year Japanese government bond yields touched a decade high of 0.865 per cent. The Australian dollar was the standout gainer, rising more than 0.5 per cent to touch a two-week high of $0.64.

The annual pace of inflation in Australia slowed in the third quarter, but the Reserve Bank of Australia's (RBA)preferred core measure rose 1.2 per cent to top forecasts of 1.1 per cent. "We consider the lift in underlying inflation over Q3 23 to be sufficiently strong for the RBA to act on their hiking bias at the upcoming Board meeting," said analysts at CBA.

RBA Governor Michele Bullock is due to appear before a parliamentary committee on Thursday. Brent crude futures were steady at $87.92 a barrel, with Europe's faltering economy prompting traders to wind back gains made in the wake of conflict in the Middle East.

The United States and Russia were among several nations pushing for a pause in fighting between Israel and Hamas to allow aid into the besieged Gaza Strip. After touching $1,997 an ounce last week, spot gold traded at $1,971. Bitcoin, meanwhile, seems to have awoken from long hibernation during the so-called "winter" that followed numerous scandals including the collapse of exchange FTX. Bitcoin is up 15 per cent this week mostly thanks to speculation that exchange-traded fund applications from BlackRock and others will succeed and drive capital into the asset class. Bitcoin last bought $34,158. The U.S. Securities and Exchange Commission has declined to comment on the speculation.

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