China stocks enjoyed their best day in a month, with main indexes jumping more than 2 percent, as the mainland market joined a global rally after US Federal Reserve remarks hosed down expectations of imminent interest rate hikes.
The bluechip CSI300 index rose 2.6 percent, to 3,216.28, while the Shanghai Composite Index gained 2.8 percent, to 3,000.64 points. Risk appetite improved after Fed Chair Janet Yellen emphasised the need to proceed "cautiously" on tightening policy. But some traders warned that the rally could be short-lived as China's economy remains fragile.
Shares rose across the board, with small-caps outperforming bluechips. Shenzhen's start-up board ChiNext surged 4.6 percent. Oil giants such as Sinopec and PetroChina led energy shares higher, amid market expectation of pending reforms in the sector. Markets scaled back expectations for how fast and far US interest rates might rise this year, after Fed Chair Janet Yellen emphasised global dangers to growth and inflation, and thus the need to proceed "cautiously" on tightening policy.
"Many investors have been haunted by looming US rate hikes, which is like a sword hanging over the head," said Wu Kan, head of equity trading at investment firm Shanshan Finance. "Yellen's remarks gave investors some breathing space, and improved risk appetite." However, Wu doesn't see big room for Chinese shares to rise further, as the economy remains fragile while market confidence hasn't fully recovered.
On the economy front, the Asian Development Bank slashed its economic growth forecast for developing Asia this year, citing global headwinds and a weaker outlook for China. Activity in China's manufacturing sector likely shrank for an eight straight month in March, but at a slower pace than in February, economists polled by Reuters said.