Asian stocks were on the front foot on Tuesday, with investors in optimistic mood betting on a weighty cut in US interest rates this week.
Extended holidays in China and South Korea made for thin trading conditions though, which saw the dollar languishing near its lowest level in over a year against the yen at 140.64, having fallen below the 140-yen level in the previous session.
That pressure saw Japan’s Nikkei end the day as the region’s outlier, with stocks weighed down by worries of a stronger currency.
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The Nikkei closed 1.03%, or 378.54 points, lower at 36,203.22, after earlier dipping more than 2%. The broader Topix index was down 0.60%, or 15.38 points, to 2,555.76.
Technology giants were the biggest drags on the Nikkei, amid broader losses in export-dependent companies. Banks also underperformed as sliding bond yields at home and abroad slashed the outlook for income from investment and lending.
Chip-making equipment giant Tokyo Electron dived 5.24%, becoming the biggest drag on the index. Chip-testing machinery maker Advantest sagged 5.63% and artificial intelligence-focused startup investor SoftBank Group slid 3.1%.
Hong Kong stocks advanced in a holiday-thinned trade, buoyed by local property giants and the upbeat listing of Midea Group which was put down to optimistic expectations of a hefty US interest rate cut on the way.
Earlier, Chinese H-shares listed in Hong Kong climbed 1.44% to 6,177.86, while the Hang Seng Index closed 1.37% ahead, or 237.90 points, at 17,660.02.
Midea Group, in its trading debut, jumped 8% after raising nearly $4 billion in the city’s largest share offering in almost four years.
Hong Kong property firms such as Wharf Real Estate Investment Company, CK Asset, and New World Development advanced significantly too, as investors bet on the benefits of an anticipated rate cut.
Meanwhile, the Hang Seng Tech Index saw a 1.24% increase. Li Auto Inc emerged as the top gainer among H-shares, while Haier Smart Home Co Ltd was the biggest loser. Mainland stock markets will resume trading on Wednesday after the mid-autumn festival break.
BoE, BoJ Rates Meetings
Elsewhere across the region, in earlier trade, Sydney, Singapore, Mumbai, Manila and Jakarta were all up. Seoul and Taipei were closed for holidays.
S&P 500 futures and Nasdaq futures both eased marginally, though Eurostoxx 50 futures tacked on 0.33% and FTSE futures gained 0.57%.
Markets are now pricing in a 67% chance that the Fed could ease rates by half a percentage point at the conclusion of its monetary policy meeting on Wednesday, after a slew of media reports revived the prospect of more aggressive easing.
For the year, markets have priced in roughly 120bps worth of easing by December.
The two-year US Treasury yield, which typically reflects near-term rate expectations, was last at 3.5547%, having fallen to a two-year low of 3.5280% in the previous session. The benchmark 10-year yield was little changed at 3.6232%.
The Bank of England and the Bank of Japan also meet this week to discuss monetary policy, where both central banks are seen keeping rates on hold.
Meanwhile, concerns over faltering Chinese demand for oil were overshadowed by the ongoing impact of Hurricane Francine on output in the US Gulf of Mexico, sending oil prices rising on Tuesday.
Brent crude futures rose 0.44% to $73.07 a barrel, while US crude futures gained 0.67% to $70.56 per barrel.
Key figures
Tokyo – Nikkei 225 < DOWN 1.03% at 36,203.22 (close)
Hong Kong – Hang Seng Index > UP 1.37% at 17,660.02 (close)
Shanghai – Composite <> CLOSED
London – FTSE 100 > UP 0.75% at 8,340.63 (0932 BST)
New York – Dow > UP 0.55% at 41,622.08 (Monday close)
- Reuters with additional editing by Sean O’Meara
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