Asia’s traders were in an upbeat mood on Wednesday in the wake of a Wall Street rally as fears eased over the Federal Reserve’s plans to tighten monetary policy, while more strong corporate results also lifted optimism about the outlook.
And while volatility and uncertainty remains on trading floors owing to geopolitical tensions and Omicron’s spread, analysts remain upbeat for the year.
With much of the region still closed for the Lunar New Year break, business was again thin, though the markets that were open enjoyed strong buying interest following upbeat performances from Europe and New York.
Tokyo, Sydney, Wellington, Jakarta and Manila were all up more than 1%, while Mumbai and Bangkok also chalked up advances.
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In Tokyo, stocks marked a four-day winning streak as investors picked up shares of firms that had issued strong earnings reports.
The benchmark Nikkei 225 index ended up 1.68% or 455.12 points at 27,533.60, while the broader Topix index rose 2.14% or 40.50 points at 1,936.56.
Financial markets in China, Hong Kong, Malaysia, Singapore, South Korea and Taiwan were closed on Wednesday for public holidays.
After a torrid January, world markets have enjoyed a strong rally over the past three days with commentators saying the selling may have gone too far and traders were buying bargains.
The positive mood has been helped by encouraging economic readings and comments from Fed officials indicating that the bank should be considered in their tightening cycle, with recent suggestions for a 50 basis point hike in March seen as too hard, too early.
Four-Decade-High Inflation
Markets strategist Louis Navellier said the remarks revived the belief that the Fed was still prepared to step in to support markets if they suffered too much.
Still, the idea of five or six increases before 2023 has been aired on several occasions as policymakers battle to rein in four-decade-high inflation.
“Fed tightening is still the path forward,” Dennis DeBusschere, of 22V Research, said. “But a short-term rebound in equities will continue, led by growth and cyclicals, as investors focus on a narrative of ‘peak tightening’ ahead of what is likely to be a weak payroll report.”
Traders are now preparing for policy decisions from the Bank of England and European Central Bank later in the week, while the release of US jobs data on Friday will provide the latest snapshot of the world’s biggest economy.
Oil prices continued to rise, with Russia-Ukraine tensions fanning supply worries, adding to expectations that the global economic reopening and recovery will spur further demand improvements.
Key figures around 0620 GMT
Tokyo > Nikkei 225: UP 1.7% at 27,533.60 (close)
Hong Kong > Hang Seng Index: Closed for a holiday
Shanghai > Composite: Closed for a holiday
New York > Dow: UP 0.8% at 35,405.24 (Tuesday close)
London > FTSE 100: UP 1.0% at 7,535.78 (Tuesday close)
- AFP with additional editing by Sean O’Meara
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