Asian markets surge higher after Wall Street takes a breather

BANGKOK — Shares rallied again in Asia on Thursday following reports that China plans to spend billions of dollars to help rebuild the capital of state-run banks.

Bloomberg and other reports cited unnamed sources as saying that the Chinese government would spend 1 trillion yuan ($142 billion) on capital injections for lenders. Earlier this week, Li Yunze, head of the National Financial Regulatory Commission, told reporters in Beijing that regulators would increase capital at six large banks, but he gave no dollar amount.

Banks interest margins and profits have shrunk, so “It is necessary to coordinate various channels such as internal and external channels to replenish capital,” Li said.

The government also announced “living allowance,” or cash handouts for the poor ahead of next week's National Day holidays. While subsidies to ordinary people are uncommon, the ruling Communist Party sometimes marks special occasions with payments to families in difficulty.

The amount of the payments was not given. But they might help address a weak point for the economy — faltering consumer spending.

Earlier this week, Beijing announced a raft of measures to help revive China's ailing property sector, such as reduced interest rates and down payment requirements for some mortgages. Defaults by real estate developers are another factor weighing on the banking sector.

Hong Kong's Hang Seng jumped 3.5% to 19,794.33, and the Shanghai Composite index added surged 3.3% to 2,993.46.

The slowdown in China's economy has weighed on trade and growth in the region, and the blasts of stimulus have lifted markets this week, though the rally lost momentum by midweek.

The Nikkei in Tokyo advanced 2.8% to 38,925.63.

South Korea's Kospi jumped 2.9%, to 2,671.57 after semiconductor maker SK Hynix launched production of a new memory chip for artificial intelligence. SK Hynix shares jumped 9.4%.

In Australia, the S&P/ASX 200 picked up 1% to 8,203.70.

“Asian stocks shrugged off Wall Street’s stumble and surged ahead on Thursday, riding high on renewed optimism over China’s stimulus push. It seems like China hasn’t run out of kitchen sinks just yet,” Stephen Innes of SPI Asset Management said in a commentary.

On Wednesday, the S&P 500 slipped 0.2% to 5,722.26, a day after setting an all-time high for the 41st time this year.

The Dow Jones Industrial Average dropped 0.7% to 41,914.75 after likewise setting a record the day before. The Nasdaq composite edged up by less than 0.1%, to 18,082.21.

Treasury yields ticked higher in the bond market after sinking the prior day on a surprisingly weak update on confidence among U.S. consumers. The worst drop in three years raised worries about the U.S. economy’s strength, but it also raised expectations for the Federal Reserve to deliver another dose of bigger-than-usual relief through a big cut to interest rates at its next meeting.

The next date on the calendar circled for a potentially big market move is next week's monthly update on the U.S. job market.

Investors are concerned over slowing hiring now that inflation has eased significantly from its peak two summers ago. The number of layoffs remains relatively low, but U.S. employers are also more hesitant to hire.

The Fed kept its main interest rate at a two-decade high for more than a year in hopes of slowing the U.S. economy enough to stifle inflation. Last week, it swung toward protecting the job market by cutting the federal funds rate by a larger-than-usual half of a percentage point. Critics say it may be moving too late.

Trump Media & Technology Group jumped 10.5% for its first back-to-back gain in two weeks. The stock had been struggling amid speculation about whether former President Donald Trump would sell some of his shares in the company behind the Truth Social network, now that he is free to do so.

In other dealings early Thursday, benchmark U.S. crude oil shed $1.61 to $68.08 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, gave up $1.63 to $71.27 per barrel.

The U.S. dollar fell to 144.75 Japanese yen from 144.76 yen. The euro was trading at $1.1158, up from $1.1133.

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