World Shares Mixed as China Plans Market Rescue

Bangkok, Jan 23 (AP) World shares were mixed Tuesday, while Hong Kong and Shanghai advanced after a report said Beijing plans to put about 2 trillion yuan ($278 billion) into supporting ailing Chinese markets.

In early European trading, Germany's DAX lost 0.2% to 16,651.29 and the CAC 40 in Paris fell 0.3% to 7,394.04. Britain's FTSE 100 edged less than 3 points higher, to 7,491.07.

The futures for the S&P 500 and the Dow Jones Industrial Average slipped less than 0.1%.

An unconfirmed report by Bloomberg cited unnamed sources saying that China plans to tap offshore funds held by Chinese state-owned enterprises and also local funds to stabilise the markets.

Hong Kong's Hang Seng jumped more than 3% but fell back slightly, ending the day up 2.6% at 15,353.98. The Shanghai Composite index gained 0.5% to 2,770.98.

Shanghai's benchmark fell 2.7% on Monday, nearing its lowest levels since 2019, China's Premier Li Qiang told a meeting of the State Council, China's Cabinet, that more had to be done to improve the quality of listed companies and to beef up supervision of markets, the financial news outlet Caixing reported.

The Hang Seng was down about 12% so far this year as of Monday's close. It got an extra boost Tuesday from news that China's National Press and Publications Administration had removed from its website the full text of draft regulations for online gaming that recently had caused sharp losses for technology companies.

A consultation period for the rules ended on Monday and it was unclear when or if a revised set of rules might be released.

Investors have pulled out of China markets as the country's recovery from the shocks of the pandemic has faltered. Last year, Beijing posted its first quarterly deficit in foreign direct investment since it began reporting the data in 1998.

Even if a substantial rescue plan helps staunch losses, it might not be a panacea if it falls short of building the confidence needed to sustain market stability, Tan Boon Heng of Mizuho Bank said in a commentary.

“China's sustained sell-off is taking place despite the rally in global equities. And rather than a delayed convergence in relative shifts, with the re-opening in China, the divergence has only worsened over time,” Tan said.

Tokyo's Nikkei 225 index gave up earlier gains to edge 0.1% lower, closing at 36,517.57. It has been nudging closer to its all-time record of 38957.44 set in December 1989, before the implosion of a financial bubble that ushered in an era of slowing growth.

Wrapping up a two-day policy meeting, the Bank of Japan cited “extremely high uncertainties surrounding economies and financial markets at home and abroad” in saying it would continue its ultra-lax monetary policy, with its benchmark interest rate staying at minus 0.1%.

A policy statement also said the central bank “will not hesitate to take additional easing measures if necessary”.

Speculation that the BOJ would end the negative interest rate policy, put in place to spur spending and investment, has pulled the Japanese yen sharply lower. As of Tuesday morning, the US dollar bought 147.28 yen, down slightly from 148.11 yen late Monday.

Elsewhere in Asia, South Korea's Kospi rose 0.6% to 2,478.61 and Australia's S&P/ASX 200 added 0.5% to 7,514.90.

Bangkok's SET sank 0.6% and India's Sensex lost 1.1%.

On Monday, the S&P 500 added 0.2%. The Dow topped 38,000 points, rising 0.4% to 38,001.81. The Nasdaq composite gained 0.3%.

This week will bring a rush of companies reporting their results for the last three months of 2023, with roughly 70 companies from the S&P 500 on the calendar. They include American Airlines, Intel, Procter & Gamble and Tesla.

On Thursday, the government will give its first estimate for how strongly the economy grew during the last three months of 2023.

Economists expect it to show the economy is still growing, but at a slower pace than during the summer. That's what the Federal Reserve wants to see, because too strong of an economy would keep upward pressure on inflation.

On Friday, the government will release the latest reading for the inflation gauge that the Fed prefers to use. Economists expect it to show inflation held steady at 2.6% in December from a month earlier.

Treasury yields have eased significantly since October on expectations for coming rate cuts. That in turn has relaxed the pressure considerably on the stock market and helped it to rip higher. Yields dipped further on Monday.

The yield on the 10-year Treasury was at 4.13% early Tuesday, down from 4.13% late Friday and from 5% in October.

In other trading, US benchmark crude oil rose 28 cents to $75.04 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, picked up 26 cents to $80.32 per barrel.

The euro rose to $1.0899 from $1.0884.