Asian stocks made modest advances on Thursday as regional investors were buoyed by hopes of a US rates cut, while upbeat economic data out of Japan added an extra boost to sentiment.
The outlier was Hong Kong’s Hang Seng which inched back despite advances in mainland markets as more figures out of China shortened the odds on more stimulus measures from Beijing.
Japan’s Nikkei share average rose, after figures showed better-than-expected economic growth in the June quarter and Wall Street closed higher overnight on September rate cut prospects in a boost to investor sentiment.
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The Nikkei closed 0.78% higher at 36,726.64, locking in a fourth straight day of gains, while the broader Topix finished up 0.73% at 2,600.75.
Stocks sensitive to the economy’s performance rose after data showed Japan’s economy expanded by a faster-than-expected annualised 3.1% in April-June.
Banks rose 2.8% to lead sectoral gains, while both securities firms and oil and coal producers gained 2.7%.
The Nikkei tanked 12.4% on August 5 in its biggest single-day fall since Black Monday amid US recession fears and a sharply stronger yen. It has since clawed back all the losses from that fall but remains well off an all-time peak of 42,426.77 touched on July 11.
Wall Street also lent some support to the Nikkei. US stocks closed higher on Wednesday as fresh inflation data reassured investors that the Federal Reserve would start cutting rates next month.
Among individual stocks, Fast Retailing climbed 2.1% to give the Nikkei the biggest lift, followed by chip-making equipment giant Tokyo Electron, up 1.5%, and AI-focused startup investor SoftBank Group adding 2.2%.
China Factory Output
Mainland China stocks rose, buoyed by hopes for more stimulus after a string of disappointing data, while Hong Kong initially followed regional peers higher as US inflation data reinforced bets the Federal Reserve will start cutting rates in September before later surrendering its gains.
Official data showed China’s factory output growth slowed and missed expectations in July, adding to indicators that the world’s second-largest economy is struggling to kick into a higher gear, even with recent government support.
The Shanghai Composite Index rose 0.94%, or 26.70 points, to 2,877.36, while the Shenzhen Composite Index on China’s second exchange gained 0.82%, or 12.63 points, to 1,553.55.
China’s blue-chip CSI300 index was up 0.99% with, earlier in the session, its financial sector sub-index higher by 1.47%, the consumer staples sector up 0.87%, the real estate index up 1.63% and the healthcare sub-index up 0.95%.
Chinese H-shares listed in Hong Kong – stocks belonging to companies from the Chinese mainland – rose 0.61% to 6,061.94, while the Hang Seng Index edged down 0.03%, or 4.22 points, to 17,109.14.
Elsewhere across the region, in earlier trade, Seoul, Mumbai, Sydney and Singapore were also up, while Taipei and Jakarta ticked down.
US S&P 500 futures pointed 0.16% higher after the cash index advanced 0.4% on Wednesday, buoyed by the slowest rise in the consumer price index in more than three years. Pan-European Stoxx 50 futures rose 0.38%.
US Dollar Eases
The dollar remained weak after slumping overnight to its lowest level to the euro since the end of last year. The single currency traded flat at $1.1012 after reaching $1.10475 in the previous session.
The 10-year Treasury yield ticked up slightly to 3.83% in Asian hours, after dipping to as low as 3.811% on Wednesday.
Traders remain convinced that the Fed will reduce rates on September 18 for the first time in four-and-a-half years, but are split on whether policy makers will opt for a super-sized 50 basis-point reduction. While inflation is slowing, signs it may remain sticky spurred a reduction of bets on a larger cut to 37.5% from about 50% a day earlier.
A major macroeconomic test looms later on Thursday with the release of US retail sales figures.
The dollar eased 0.1% to 147.12 yen as the pair continued its week-long consolidation around the 147 mark.
The Australian dollar advanced 0.36% to $0.6620, erasing early losses after a surprise surge in employment helped offset weakness in key commodity prices.
Gold edged up 0.2% to $2,453 per ounce after Wednesday’s 0.7% dive. Oil prices trod water following the previous day’s losses, following an unexpected rise in US crude inventories.
Key figures
Tokyo – Nikkei 225 > UP 0.78% at 36,726.64 (close)
Hong Kong – Hang Seng Index < DOWN 0.03% at 17,109.14 (close)
Shanghai – Composite > UP 0.94% at 2,877.36 (close)
London – FTSE 100 > UP 0.03% at 8,283.39 (0934 but)
New York – Dow > UP 0.61% at 40,008.39 (Wednesday close)
- Reuters with additional editing by Sean O’Meara
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