The Japan Times - Markets start week on front foot as China unveils consumer plan

The gains follow a much-needed rally on Wall Street that was stoked by optimism US lawmakers would pass a spending bill to avert a painful government shutdown.

Eyes were on Beijing as officials were set to outline their plans to kickstart spending by the country's army of consumers after years of post-Covid weakness that has been a major drag on economic growth.

The State Council unveiled a set of initiatives on Sunday that aim to "promote reasonable wage growth by strengthening employment support in response to economic conditions", according to state news agency Xinhua.

The plan looks to boost income with property reforms, stabilise the stock market and encourage lenders to provide more consumption loans with reasonable limits, terms and interest rates.

Officials were also looking at raising pension benefits, establishing a childcare subsidy system, and ensuring workers' rights to rest and holidays are legally protected.

The move comes after data showed consumer prices dropped into deflation in February for the first time in a year, while producer prices continued to fall.

However, observers warned that leaders had a tough job ahead of them amid Trump's trade war.

"While fiscal spending targeting domestic demand has expanded, government support is limited," said economists at Moody's Analytics, adding that "mercurial US economic policies are set to drag on global trade and hit China".

"With China firmly in US President Donald Trump's sights, deflation concerns in China will worsen. The chaos of tariffs and rising unemployment will keep consumer spending weak, denting inflation's demand drivers.

"Manufacturers will have to look closer to home to sell tariff-targeted products. That combination -- weaker demand and more domestic supply -- will be a handbrake on price growth."

- Fed projections -

Data on Monday provided a little support, with retail sales up slightly more than expected in the first two months of the year, while industrial production also topped estimates.

Hong Kong gained to build on a blockbuster start to the year fuelled by a chase into Chinese tech giants, while Shanghai, Tokyo, Sydney, Singapore, Seoul, Taipei, Mumbai and Manila also enjoyed healthy buying.

London and Paris edged up at the open while Frankfurt was flat.

Gold was sitting around $2,985 per ounce, having broken to a record high near $3,005 on Friday owing to a rush into safe havens as traders fret over Trump's tariffs.

All three main indexes on Wall Street ended on the front foot on Friday on optimism a government shutdown would be averted. Later in the day lawmakers passed the spending bill that will keep business going through to September.

Traders are also looking ahead to the Federal Reserve's next policy decision as policymakers try to navigate Trump's tariffs campaign, which some economists warn could reignite inflation and tip the economy into recession.

While the bank is expected to stand pat on interest rates, it will release its summary of economic projections and its outlook for borrowing costs this year.

The gathering comes after a consumer survey released by the University of Michigan last week said expectations for the future "deteriorated" with "many consumers". It cited a "high level of uncertainty around policy and other economic factors".

- Key figures around 0815 GMT -

Tokyo - Nikkei 225: UP 0.9 percent at 37,396.52 (close)

Hong Kong - Hang Seng Index: UP 0.8 percent at 24,145.57 (close)

Shanghai - Composite: UP 0.2 percent at 3,426.13 (close)

London - FTSE 100: UP 0.2 percent at 8,647.67

Euro/dollar: DOWN at $1.0872 from $1.0884 on Friday

Pound/dollar: DOWN at $1.2932 from $1.2936

Dollar/yen: UP at 148.92 yen from 148.62 yen

Euro/pound: DOWN at 84.08 pence from 84.14 pence

West Texas Intermediate: UP 0.8 percent at $67.70 per barrel

Brent North Sea Crude: UP 0.7 percent at $71.10 per barrel

New York - Dow: Up 1.7 percent at 41,488.19 (close)

S.Fujimoto--JT