Hong Kong stocks rally as dovish central banks inspire rate cut hopes

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Federal Reserve Chair Jerome Powell said the US central bank ‘can and will’ begin to cut rates this year if inflation moves sustainably towards the 2 per cent target

Overnight, ECB President Christine Lagarde talked of easing monetary restrictions and earlier this week, PBOC chief Pan Gongsheng said banks’ RRR could be cut

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Screens showing the index and stock prices outside Hong Kong Exchange Square (HKEX) in Central. Photo: Sun Yeung

Jiaxing Li

Published: 10:46am, 8 Mar 2024Updated: 4:55pm, 8 Mar 2024

Hong Kong stocks gained, amid expectations global central banks will ease monetary conditions this year, after the US Federal Reserve Chairman Jerome Powell said interest rates may be cut this year and the European Central Bank (ECB) President Christine Lagarde said plans to ease restrictions were being discussed. Their comments follow those made by PBOC Governor Pan Gongsheng earlier this week, that there is still room to cut banks’ reserve ratios.

The Hang Seng Index jumped 0.8 per cent to 16,353.39 at close on Friday. The Tech Index strengthened 0.8 per cent and the Shanghai Composite Index added 0.6 per cent.

Alibaba strengthened 0.8 per cent to HK$71.25, online travel agency Trip.com added 1.3 per cent to HK$342.20 and NetEase gained 2.5 per cent to HK$166.70. Sportswear maker Li Ning jumped 2.7 per cent to HK$19.22 and peer Anta advanced 2.8 per cent to HK$74.85. Wuxi Apptec rose 4 per cent to HK$46.80 and Wuxi Biologic gained 2.1 per cent to HK$17.44 to recoup some of its losses on Thursday.

US Federal Reserve Chair Jerome Powell said on Thursday, the US central bank “can and will” begin cutting rates this year if inflation moves sustainably towards the 2 per cent target. The Fed is not far from getting that confidence and is “well aware” of the risk of cutting too late, he added. On Thursday, ECB President Christine Lagarde told reporters the central bank has started to discuss the dialling back of its restrictive monetary policy stance.

The market has priced in the chances of a rate cut by the US Federal Reserve at its June meeting at nearly 75 per cent, according to CME’s FedWatch tool.