Asia stocks saw a day of steady gains on Wednesday with hopes of a Fed pullback on its aggressive rate hikes policy lifting investors’ mood.
China and Hong Kong shares were also boosted by optimism that Beijing is planning to ease its ‘zero-Covid’ strategy and open up the world’s No-2 economy again.
But Japan’s Nikkei index ended flat with traders there more cautious about the looming Federal Reserve rate decision that should also give clues on the US’s future policy path.
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The Nikkei index flitted in and out of positive territory but was becalmed by the afternoon to close at 27,663.39, dropping 0.06%, or 15.53 points. The broader Topix index rose 0.10%, or 1.96 points, to 1,940.46.
Shares of Sony surged 7% after the conglomerate raised its full-year operating profit forecast by 4.5%.
MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.8% after wobbling earlier in the day.
China and Hong Kong stocks ended higher for a second successive session, driven by upbeat remarks by Chinese regulators about policy support and rising expectations among investors over the easing of strict Covid-19 measures.
Structural reform will continue to fuel China’s economic growth, and the country’s reform and opening-up policy will continue, Yi Gang, governor of the People’s Bank of China, told the Hong Kong Monetary Authority’s Global Financial Leaders’ Investment Summit.
However, a Chinese industrial park that hosts an iPhone factory belonging to Foxconn in Zhengzhou announced a fresh Covid-19 lockdown.
Typhoon Shuts Hong Kong
China’s blue-chip CSI 300 Index ended up 1.2%, while the Shanghai Composite Index rose 1.15%, or 34.17 points, to 3,003.37. The Shenzhen Composite Index on China’s second exchange was up 1.3%, or 25.85 points, to 1,968.20.
Hong Kong’s market was closed early in the afternoon, after a typhoon 8 warning signal. But there was still time for the Hang Seng Index to rally 2.4%, or 371.90 points, to 15,827.17. The Hang Seng China Enterprises Index jumped 2.8%.
Macau gaming operators and tech firms jumped 10.2% in the afternoon, healthcare companies surged 7.1%, while tech firms were up 2.7%.
Elsewhere across the region, equities in the Philippines climbed 0.3%, Taiwan’s benchmark advanced 0.5%, and Australia’s ASX edged up 0.14%. However, Singapore stocks fell 0.2% and the Indonesian benchmark inched lower as well.
Indian stocks slipped back with Mumbai’s signature Nifty 50 index down 0.4%, or 67.20 points, at 18,078.20.
December Rate Hike Speculation
Globally, the dollar sagged as investors braced for the US Federal Reserve’s policy decision later in the day, with many hoping for signs of a slowdown in future rate hikes.
European markets looked set to extend the cautious optimism, with the pan-region Euro Stoxx 50 futures up 0.5%. US S&P 500 futures edged up 0.3% while the Nasdaq futures rose 0.4%.
Markets widely expect the Fed to raise its benchmark overnight interest rate by 75 basis points (bps) to a range of 3.75% to 4%, the fourth such increase in a row.
However, traders are split on the size of the hike in December, with futures market pricing in a 44.5% probability of a 50-bps increase, according to CME’s Fed tool.
Overnight, a survey showed US job openings unexpectedly rose in September, suggesting that demand for labour remains strong despite rate hikes. That sparked a reversal in Treasury yields and lifted market bets on interest rates to above 5% next year.
US stocks closed lower, with the Dow Jones Industrial Average slipping 0.24%, the S&P 500 shedding 0.4% and the Nasdaq Composite falling 0.9%.
US Dollar Eases
In the currencies market, the dollar eased 0.2% against a basket of major currencies. It fell 0.5% against the Japanese yen to 147.6 yen amid fears of intervention from authorities and thin liquidity.
US Treasury yields were largely steady after reversing much of the losses overnight on the unexpected strength in the jobs data.
The yield on benchmark ten-year notes was little changed at 4.0422% while the yield on two-year notes eased 4 basis points to 4.5157%.
In commodities, oil climbed after industry data showed a surprise drop in US crude stockpiles, suggesting demand is holding up.
US crude oil futures rose 1.4% to $89.65 per barrel, while Brent crude futures was up 1.2% at $95.82.
Key figures
Tokyo – Nikkei 225 < DOWN 0.06% at 27,663.39 (close)
Hong Kong – Hang Seng Index > UP 2.4% at 15,827.17 (close)
Shanghai – Composite > UP 1.15% at 3,003.37 (close)
London – FTSE 100 < DOWN 0.13% at 7,176.55 (0935 GMT)
New York – Dow < DOWN 0.24% at 32,653.20 (Tuesday close)
- Reuters with additional editing by Sean O’Meara
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