Asia’s major stock indexes advanced on Thursday as strong signals on imminent rate cuts and upbeat tech earnings buoyed investors.
The dollar hovered near one-year lows as Federal Reserve minutes signalled that US interest rate cuts are set to begin in a few weeks’ time but China’s continuing struggles, particularly its weak consumer demand, halted any runaway gains.
Japan’s Nikkei share average, though, still closed at a three-week high, recovering from the index’s sharpest drop in 37 years hit earlier this month, but there was also caution ahead of remarks from central bank heads in Japan and the US.
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The Nikkei share average gained 0.68%, or 259.21 points, to close at 38,211.01, its highest since August 1, while the broader Topix was ahead 0.25%, or 6.54 points, to 2,671.40.
Technology investor SoftBank Group fell 1.25% and weighed on the Nikkei the most. The drug sector rose 1.56% to become the top performer among the Tokyo Stock Exchange’s 33 industry sub-indexes.
The Nikkei plunged 12.4% on August 5 in its biggest decline since the 1987 Black Monday crash but bounced back 10% the following day. The index is still below its July peak of above 42,000 but has now risen 23% from its August 5 low.
The market focus will next be on Fed chief Jerome Powell’s keynote speech at Jackson Hole and a special session of Japan’s parliament on Friday, where BOJ’s Kazoo Ueda will speak.
Chinese stocks were mixed with investor confidence low amidst ongoing trade tensions, while in Hong Kong the tech sector enjoyed gains.
Banking and property stocks also saw gains, but consumer and electric vehicle stocks declined after the EU confirmed it will maintain its high tariffs on Chinese EV imports.
Seoul, Mumbai Advance
The Shanghai Composite Index dipped 0.27%, or 7.81 points, to 2,848.77, while the Shenzhen Composite Index on China’s second exchange slipped 1.07%, or 16.33 points, to 1,505.08.
The Hang Seng Index rose 1.44%, or 249.99 points, to 17,641.00, driven by a surge in tech stocks like Xiaomi, which jumped 8% on better-than-expected quarterly revenue.
Elsewhere across the region, in earlier trade, markets swung in and out of positive territory and Sydney, Mumbai, Seoul and Manila rose while Singapore, Wellington and Taipei slipped. MSCI’s broadest index of Asia-Pacific shares outside Japan was mostly flat.
Treasuries rallied on Wednesday and ten-year yields were broadly steady at 3.80% on Thursday in Asia. Two-year yields held at 3.93%.
Interest rate futures markets have fully priced in a 25-basis-point cut in the US next month, with a one-third chance of a 50-bp cut. They project 222 bps of US easing by the end of 2025, against 163 bps for Europe.
The euro stood at $1.1144 in Asia, having touched $1.1173 on Wednesday, its highest since the middle of last year and above chart resistance at $1.1139, with the way open to the 2022 high around $1.1276. Sterling bought $1.3084 and hit a more than one-year high of $1.3119 on Wednesday.
Key figures
Tokyo – Nikkei 225 > UP 0.68% at 38,211.01 (close)
Hong Kong – Hang Seng Index > UP 1.44% at 17,641.00 (close)
Shanghai – Composite < DOWN 0.27% at 2,848.77 (close)
London – FTSE 100 > UP 0.25% at 8,304.04 (0937 BST)
New York – Dow > UP 0.14% at 40,890.49 (Wednesday close)
- Reuters with additional editing by Sean O’Meara
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