Asian equities continue their post-Fed surge, with some support from China data

Friday saw a sharp increase in the majority of Asian stocks, building on previous gains after the Federal Reserve issued dovish signals. Positive economic data from China also helped boost investor confidence.

Treasury yields fell on expectations that the United States would cut interest rates in 2024, and technology-heavy indexes performed the best of the day by a wide margin. The largest winner from this trade was Hong Kong's Hang Seng index, which rose 3.5% thanks to heavyweight tech stocks.

Regional stocks also benefited from Wall Street's strong overnight close, as benchmark U.S. stocks were tracking dovish Fed outlooks and trading near record highs.

A significant amount of bargain purchasing was also seen in Chinese equities, as the CSI 300 bounced back from a nearly five-year low. A run of dismal economic data in recent months has damaged sentiment towards China as the anticipated post-COVID economic recovery has not materialised.

Data on fixed asset investments and retail sales were sluggish, suggesting that the Chinese economy is still weak in several areas.

Beijing, however, did not waver in its pursuit of monetary stimulus. Through its medium-term lending facility, the People's Bank of China poured over 1.45 trillion yuan ($200 billion) into the economy on Friday.

After the Fed announced that it was done raising interest rates and that it would reduce rates even more in 2024, Asian markets rose, maintaining their gains from the previous day. This indicates that global liquidity levels are rising, which will inevitably attract more capital into riskier markets.

The markets are factoring in a 25 basis point reduction by the Federal Reserve by March 2024.

(Sources: investing.com, reuters.com)