Asia’s major equity markets saw healthy gains on Wednesday following a positive performance by Wall Street as traders prepared for the release of highly anticipated US inflation data.
Oil prices also enjoyed a small bounce on demand optimism after two days of losses fuelled by the positive vibes from Eastern Europe and as talks on an Iran nuclear deal appear to be progressing.
With speculation swirling over the Federal Reserve’s plans to battle soaring prices, global equities have fluctuated wildly at the start of the year as traders try to position themselves for a series of interest rate hikes that are likely to begin in March.
The prospect of the removal of cheap cash – which has pushed markets to record or multi-year highs – has particularly hit tech firms as they are more susceptible to higher rates.
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However, the sector helped New York’s three main indexes to healthy gains on Tuesday, and Asia followed suit in early trade Wednesday.
Hong Kong led the way, jumping more than 2% thanks to a 6.8% surge in market heavyweight Alibaba after Japan’s SoftBank allayed fears it was planning to offload some of its huge holdings in the e-commerce giant.
Alibaba had taken a hit earlier on speculation about the share sale, which compounded the Chinese firm’s woes after suffering hefty losses owing to Beijing’s crackdown on the tech sector.
The Hang Seng Index climbed 2.06%, or 500.50 points, to 24,829.99. The Shanghai Composite Index added 0.79%, or 27.32 points, to 3,479.95, while the Shenzhen Composite Index on China’s second exchange jumped 1.61%, or 36.72 points, to 2,317.23.
Tokyo, Sydney, Taipei and Bangkok were all up more than 1%, while Shanghai, Seoul, Singapore, Wellington, Mumbai, Manila and Jakarta also rallied. London, Paris and Frankfurt all rose at the open.
The benchmark Nikkei 225 index ended up 1.08%, or 295.35 points, at 27,579.87, while the broader Topix index was up 0.94%, or 18.16 points, at 1,952.22.
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Still, investors remain nervous and Thursday’s US January inflation print is front and centre this week.
Forecasts are for another pop up from the four-decade-high 7% seen in December, while a big miss in either direction could have big consequences for markets.
A higher reading will pile pressure on the Fed to embark on a more aggressive tightening campaign but a weaker figure would temper worries.
After speaking to Russia’s Vladimir Putin, French President Emmanuel Macron said he saw the “possibility” for talks between Moscow and Kiev over the festering conflict in eastern Ukraine to move forward, and “concrete, practical solutions” to lower tensions.
But hopes for a breakthrough have weighed on the oil market in recent days, as have indications that an agreement with Iran on its nuclear programme was close.
A deal with Tehran would pave the way for it to begin selling crude on the international market again, pushing much-needed supplies into a tight market.
Still, with demand expected to continue rising as the global economy reopens, commentators predict the black gold will break past $100 a barrel soon. But after falling more than 2% on Tuesday, both main contracts extended losses in Asia.
Key figures around 0820 GMT
Tokyo > Nikkei 225: UP 1.1% at 27,579.87 (close)
Hong Kong > Hang Seng Index: UP 2.1% at 24,829.99 (close)
Shanghai > Composite: UP 0.8% at 3,479.95 (close)
London > FTSE 100: UP 0.6% at 7,614.51
New York > Dow: UP 1.1& at 35,462.78 (Tuesday close)
- AFP with additional editing by Sean O’Meara
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