BEIJING: Chinese stocks climbed with the Australian dollar amid speculation that the slowest inflation in five years allows room for further stimulus. Oil fell for the first time in four days and gold rallied.
The Shanghai Composite Index climbed 0.8 percent by 1:15 p.m. in Tokyo, while a Hong Kong gauge of mainland companies added 0.5 percent. The MSCI Asia Pacific Index was little changed and Standard & Poor’s 500 Index futures gained 0.1 percent. U.S. crude declined 1.3 percent after rallying more than 9 percent the past three days. The Aussie added 0.3 percent and South Korea’s won climbed 0.4 percent, leading gains against the U.S. dollar. Gold advanced 0.3 percent.
China’s slowing inflation and a 35th straight contraction in factory gate prices give policy makers room undertake extra stimulus after cutting interest rates in November and reducing banks’ reserve requirements last week. Oil’s recent rally is tapering amid forecasts for continued supply growth. A gauge of global equities fell to a one-week low yesterday as Greek leaders vowed to abandon austerity and diplomats sought a framework for talks over the conflict in Ukraine.
China’s price data “smells of deflation,” said Michael Every, the Hong Kong-based head of Asia Financial Markets research at Rabobank NA. “China will have to respond in kind to offset that threat. The Greece situation is crucial and risks are downplayed by the market so far.”
Hong Kong’s Hang Seng Index fluctuated while the Hang Seng China Enterprises Index advanced for the first time in three days.
