Asia’s major stock indexes edged ahead on Tuesday with investors hopeful ahead of the latest economic data releases, corporate earnings posts and this week’s US Federal Reserve’s policy meeting.
The US labour market report is due, while the Fed is set to convene on Tuesday for a two-day meeting at which it is expected to hold firm on interest rates but strike a hawkish tone.
Japan’s Nikkei share average rose, underpinned by a strong overnight finish on Wall Street and a post-holiday boost after its markets were closed on Monday.
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The Nikkei share average was up 1.24%, or 470.90 points, to close at 38,405.66. The index marked its first monthly decline this year, falling 4.99% in April in its biggest monthly drop since December 2022.
The broader Topix was ahead 2.11%, or 56.69 points, to 2,743.17.
The markets’ focus is now on the US Fed’s policy meeting this week after Japan’s currency surged as much as 5 yen against the dollar from a 34-year low of 160.245 on Monday in what traders cited as intervention.
Japanese authorities have not confirmed that they had stepped into the currency market in support of the yen.
Mainland China stocks edged lower, though, as investors largely remained on the sidelines ahead of the long Labor Day holiday and the Fed’s policy meeting, while Hong Kong shares inched higher.
The country’s markets were also unruffled by China’s April official factory survey, which showed manufacturing activity expanded at a slower pace.
The Shanghai Composite Index lost 0.26%, or 8.22 points, to 3,104.82, while the Shenzhen Composite Index on China’s second exchange dipped 0.70%, or 12.36 points, to 1,756.08.
Lacklustre European Opening
China’s blue-chip CSI300 index was down 0.54% with, earlier in the session, its financial sector sub-index lower by 0.47%, the consumer staples sector up 0.84%, the real estate index down 3.29% and the healthcare sub-index up 0.05%.
Chinese H-shares – stocks belonging to companies from the Chinese mainland – listed in Hong Kong rose 0.12% to 6,290.62, while the Hang Seng Index was up 0.09%, or 16.12 points, to close at 17,763.03.
Hong Kong’s stock market will be closed on May 1 for the Labor Day holiday, while mainland financial markets will be closed for an extended holiday from Wednesday, with trading set to resume next Monday.
Elsewhere around the region, in earlier trade, indexes were mostly ahead though profit-taking after a recent run-up pared the morning’s healthy gains. Sydney, Seoul, Singapore, Wellington, Bangkok and Jakarta were all up but Mumbai, Taipei and Manila edged down.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.36% higher, set to clock in a nearly 1% gain for the month, its third straight month of gains.
European bourses were set for a lacklustre open, with Eurostoxx 50 futures and FTSE futures little changed ahead of a euro zone inflation report.
Yen Surges, Intervention Suspected
The currency spotlight remains on the yen after a volatile start to the week as the Japanese currency surged to 154.40 per dollar on Monday from a fresh 34-year low of 160.245, with traders citing yen-buying intervention by authorities.
The yen has been under pressure as US interest rates have climbed and Japan’s have stayed near zero, funnelling cash out of yen and into higher-yielding assets.
Meanwhile, investors have continually had to dial back expectations for the timing and magnitude of US rate cuts this year after hotter-than-expected inflation reports, with markets pricing in a 57% chance of a rate cut in September, the CME FedWatch Tool showed.
Traders are now pricing in 35 basis points of cuts in 2024, drastically lower than the 150 bps of easing priced at the start of the year.
The shifting expectations on US rates have lifted Treasury yields and the dollar, dominating the currency market. Against a basket of currencies, the dollar was higher at 105.85. The index is up over 1% in April and over 4% for the year.
Meanwhile, earnings season heats up this week with high profile results from amazon.com and Apple.
Overnight, US stocks ended higher, led by sharp gains in Tesla shares after the electric vehicle maker made progress in securing regulatory approval to launch its advanced driver-assistance program in China.
US crude fell 0.22% to $82.45 per barrel and Brent was at $88.29, down 0.12% on the day. Spot gold eased 0.3% to $2,325.79 per ounce.
Key figures
Tokyo – Nikkei 225 > UP 1.24% at 38,405.66 (close)
Hong Kong – Hang Seng Index > UP 0.09% at 17,763.03 (close)
Shanghai – Composite < DOWN 0.26% at 3,104.82 (close)
London – FTSE 100 > UP 0.25% at 8,167.54 (0855 BST)
New York – Dow > UP 0.38% at 38,386.09 (Monday close)
- Reuters with additional editing by Sean O’Meara
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