Asian markets rallied on Tuesday, scoring gains off the back of upbeat earnings reports from the US and a dramatic U-turn from the UK government on its controversial tax-cutting plans.
Risk appetite returned across the region spurred by a strong overnight Wall Street performance buoyed by, among others, the Bank of America posting better than expected third-quarter results, though China’s main Shanghai bourse was an outlier, dipping amid confusion over the delayed release of key economic data.
The Nikkei index rose as much as 1.7% in early trade but the index pared some gains and fell below the 27,000 psychological barrier, before rebounding and closing up 1.4% at 27,156.14. The broader Topix rose 1.2%.
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“I think the buying has been driven in anticipation of stocks rising on Wall Street this evening,” Yutaka Miura, a senior equities analyst at Mizuho Securities said, pointing to similarly strong performance in markets like South Korea, Taiwan and Hong Kong.
Every sector on the Nikkei advanced, except energy and utilities. Transportation shares continued to perform well following last week’s relaxing of border restrictions for tourists.
Meanwhile, China’s yuan ticked higher while domestic equities fell as the nation’s once-in-five-year Communist Party Congress continued. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 1.55%.
Beijing delayed the release of economic indicators scheduled for publication this week, including its third-quarter gross domestic product data due on Tuesday.
The data was expected to show that China’s GDP expanded 3.4% in the period from July to September, according to a poll, as recent supportive government policies have started to impact the economy.
The share drop came a day after Chinese state banks were seen stepping up their intervention to defend the weakening yuan.
The Shanghai Composite Index dipped 0.13%, or 3.98 points, to 3,080.96, while the Shenzhen Composite Index on China’s second exchange advanced 0.36%, or 7.27 points, to 2,005.08.
The Hang Seng Index rose 1.8%, or 301.68 points, to 16,914.58.
Philippines Shares Gain
Elsewhere across the region, shares in the Philippines were on track for their sixth straight session of gains, jumping 1.8%, while South Korea’s KOSPI index advanced 1.4%.
India’s Nifty 50 and Thailand shares gained 1.0% and 0.9%, respectively, while shares in Singapore remained supported above the 3,000-mark.
Globally, stocks rose after the turnaround in British fiscal policy brightened investor sentiment, while sterling flirted with two-week highs on hopes the Bank of England may further delay plans for quantitative tightening.
European stock futures indicated stocks were set to continue their ascent, with the Eurostoxx 50 futures up 1.25%, German DAX futures up 1.2% and FTSE futures up 0.9%. US futures also pointed to a higher opening with S&P 500 futures up 1.6% and Nasdaq futures up 1.8%.
The British central bank, which had already delayed the start of a scheme to sell down 838 billion pounds ($955 billion) of government bond holdings, is likely to push the sale of the bonds, the Financial Times reported on Tuesday.
Australian Dollar Advances
The dollar index fell 0.178%, touching its lowest levels since October 6, while the euro was up 0.21% to $0.9859.
The Australian dollar rose on Tuesday after the Reserve Bank of Australia said it expects to raise interest rates further over the coming months.
The yen touched a fresh 32-year low of 149.10 per dollar on Monday, not far off the psychological metric of 150.
Investors have been watching out for any signs of further intervention by the Bank of Japan, with authorities repeatedly warning of a firm response to overly rapid yen declines.
The drop in the dollar helped prop up gold as well as oil prices. Brent crude futures rose 74 cents, or 0.8%, to $92.36 per barrel by 0505 GMT, while US West Texas Intermediate (WTI) crude futures gained 78 cents, or 0.9%, to $86.24 per barrel.
Key figures
Tokyo – Nikkei 225 > UP 1.42% at 27,156.14 (close)
Hong Kong – Hang Seng Index > UP 1.82% at 16,914.58 (close)
Shanghai – Composite < DOWN 0.13% at 3,080.96 (close)
London – FTSE 100 > UP 1.11% at 6,997.16 (0935 BST)
New York – Dow > UP 1.86% at 30,185.82 (Monday close)
- Reuters with additional editing by Sean O’Meara
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