Asia’s major stock indexes drifted in different directions on Wednesday, pulled down on the one hand by rising geopolitical tensions and boosted on the other by positive news out of the US and Japan.
Japan’s Nikkei share average rallied for a fourth straight session, helped by signs of consumer spending in department stores and spillover from optimism over billionaire Warren Buffett eyeing increasing investments in the country.
The Nikkei share average edged up 0.57%, or 159.33 points, to close at 28,082.70, while the broader Topix was ahead 0.76%, or 15.07 points, to 2,006.92.
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Buffett, 92, told Nikkei in an interview on Tuesday that he was proud of his investments in Japan’s top trading houses. The renowned investor added that “there are always a few” other Japanese investments he is considering.
His Berkshire Hathaway has 7.4% stakes in trading houses Itochu Corp, Marubeni Corp, Mitsubishi Corp, Mitsui & Co and Sumitomo Corp, all of which rose about 2% or more on Wednesday.
The upbeat sentiment seemed to help the debut of lunar transport start-up ispace Inc, shares of which were untraded as a glut of buy orders overwhelmed offers.
Hong Kong stocks fell, though, as heightened Sino-US tensions dented sentiment, while investors are closely watching US inflation print due later in the day. China shares were up.
Taiwan President Tsai Ing-wen said on Wednesday that her recent overseas trip, which included the United States, showed the world Taiwan’s determination to defend freedom and democracy.
Tsai’s statements came after state media reported that the Chinese navy continued with “actual combat training” around Taiwan on Tuesday.
AI Frenzy Fuels Market
In China, artificial intelligence (AI) related themes were still fuelling the market, while investors were losing their appetite for consumer staples and tourism sectors.
AI shares rose 3.4% and the CSI Computer Index jumped 3.7%, with Inspur Electronic Information Industry Co Ltd rising to a maximum of 10%.
The Shanghai Composite Index rose 0.41%, or 13.61 points, to 3,327.18, while the Shenzhen Composite Index on China’s second exchange gained 0.36%, or 7.68 points, to 2,147.16.
Tech stocks traded in Hong Kong declined 1.1%, while property shares continued their rally and were up 1.2%. Hong Kong’s benchmark Hang Seng Index slipped 0.86%, or 175.38 points, to 20,309.86.
Elsewhere across the region, Australia’s S&P/ASX 200 index rose 0.41% while Indian stocks also advanced with Mumbai’s signature Nifty 50 index up 0.51%, or 90.70 points, at 17,813.00.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.17% lower in choppy trading, set to snap its three day winning streak.
Europe Expected to be Subdued
Globally, investors were waiting on the crucial US inflation report that will likely influence how soon the Federal Reserve will end its aggressive rate hikes, with markets betting on at least one more at next month’s policy meeting.
The subdued mood looked set to continue in Europe, with futures indicating a broadly lower open. The Eurostoxx 50 futures was down 0.16%, German DAX futures up 0.01% and FTSE futures down 0.07%.
After Friday’s jobs report showed a resilient US labour market, emboldening bets of a 25 basis point hike at the Fed’s next meeting in May, investor attention is firmly on the March inflation report due later in the day.
The consumer price index is expected to show core inflation rose 0.4% on a monthly basis and 5.6% year-over-year in March, according to a Reuters poll of economists.
Markets are now pricing in a 66% chance of the Fed raising interest rates by 25 basis points in May and then pausing for the subsequent meetings, according to the CME FedWatch tool.
Silicon Valley Bank Turmoil
The turmoil in the banking sector following the failure of Silicon Bank and Signature Bank had spurred some expectations that the Fed may need to cut interest rates to alleviate some of the stress in the market but a sticky inflationary environment is unlikely to give the Fed much room.
The cut in oil production announced by the OPEC+ group last week also fanned fears of inflation flaring up, and for investors to really lower their concerns over inflation there will have to be a clear fall in prices for services, Saxo Markets strategists said.
In the currency market, the dollar index, which measures the US currency against six rivals, eased 0.049%. The yen weakened 0.09% to 133.80 per dollar.
US crude rose 0.06% to $81.58 per barrel and Brent was at $85.65, up 0.05% on the day.
Key figures
Tokyo – Nikkei 225 > UP 0.57% at 28,082.70 (close)
Hong Kong – Hang Seng Index < DOWN 0.86% at 20,309.86 (close)
Shanghai – Composite > UP 0.41% at 3,327.18 (close)
London – FTSE 100 > UP 0.60% at 7,832.15 (0934 GMT)
New York – Dow > UP 0.29% at 33,684.79 (Tuesday close)
- Reuters with additional editing by Sean O’Meara
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