Asian stocks closed in on 16-month highs on Tuesday with investors remaining hopeful that central banks are ready to ease back on rate hikes and the global economy is beginning to bounce back.
Traders found more cause for cheer over economic prospects than reasons to worry, even as the latest data showed risks remain. Though the mood was not so upbeat in China where doubts over Beijing’s stimulus promises weighed.
In Japan, shares ended higher thanks to a weaker yen, with gains led by heavyweight chip-related firms and auto maker Toyota Motor, which doubled its quarterly profit.
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The yen slipped to a fresh three-week low, as traders pondered the Bank of Japan’s latest steps to tweak its yield curve control policy.
The yen and stocks typically move in opposite directions, since a stronger currency hurts exporters’ competitiveness and also makes stocks more expensive for foreigners.
The Nikkei share average edged up 0.92%, or 304.36 points, to close at 33,476.58, while the broader Topix was ahead 0.64%, or 14.80 points, to 2,337.36.
China stocks wobbled, though, after the markets had rebounded sharply in recent sessions, with some investors locking in profits as they remain sceptical on the country’s policy measures to aid a weak post-Covid recovery.
The Shanghai Composite Index edged back 0.01%, or 0.09 points, to 3,290.95, while the Shenzhen Composite Index on China’s second exchange fell 0.37%, or 7.75 points, to 2,061.76.
China’s State Council on Monday announced measures to restore and expand consumption in the automobile, real estate and services sector, aiming to give full play to the “fundamental role” of consumption in economic development.
That comes after China’s top policymakers last week pledged at a Politburo meeting to step up support for the economy and strengthen counter-cyclical adjustments in the second half of this year.
The authorities, however, have not released much detail on their plans, leaving investors suspicious.
Meanwhile, China’s factory activity swung to contraction in July, a private sector survey showed on Tuesday, with supply, demand and export orders all deteriorating as firms blamed sluggish market conditions at home and abroad.
In Hong Kong, tech giants added 0.6% while mainland property developers dropped 1.2%. The Hang Seng Index dropped 0.34%, or 67.82 points, to 20,011.12.
US Dollar Index Rallies
Elsewhere across the region, in earlier trade, Sydney, Seoul, Singapore, Taipei and Manila all pushed higher, while Mumbai dropped.
MSCI’s broadest index of Asia-Pacific shares edged slightly higher, inching back toward the high reached Monday, which was its strongest level since April of last year.
Signs of a peaking out in European inflation on Monday echoed the narrative in the United States, providing more evidence that the biggest central banks are nearing the end of their tightening cycles.
But the positive US narrative faces some crucial tests this week, with several closely watched jobs reports due, culminating with monthly payrolls on Friday.
In currencies, the US dollar index – which measures the currency against six major peers – rose as high as 102.07 for the first time since July 10.
That was aided by a continued retreat in the yen to a three-week low of 142.84 per dollar, as investors looked past the BoJ’s surprise tweak of its 10-year yield ceiling to view changes to the negative short-term rate as a still distant prospect.
Oil prices were little changed on Tuesday, trading near a three-month high reached on Monday, on signs of tightening global supply, as producers implement output cuts, and strong demand in the United States, the world’s biggest fuel consumer.
Key figures
Tokyo – Nikkei 225 > UP 0.92% at 33,476.58 (close)
Hong Kong – Hang Seng Index < DOWN 0.34% at 20,011.12 (close)
Shanghai – Composite < DOWN 0.01% at 3,290.95 (close)
London – FTSE 100 < DOWN 0.14% at 7,688.63 (0936 GMT)
New York – Dow > UP 0.28% at 35,559.53 (Monday close)
- Reuters with additional editing by Sean O’Meara
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Ant IPO Unlikely in the Short Term, Chinese State Media Says
Nikkei Gains on Fed Hopes, China Stimulus Boosts Hang Seng
