Asia’s major stock indexes rebounded on Thursday, back on the front foot after a string of losing sessions as investors rode a Wall Street tech wave, despite sentiment taking a knock from a higher-than-expected US inflation report.
US core inflation surprised slightly on the upside, dashing hopes of a large rate cut by the Federal Reserve next week. That saw the region’s markets react to domestic cues with currency moves and weak consumer demand swaying traders.
Japan’s Nikkei share average surged after a seven-day slide, as Wall Street’s overnight tech gains and a weaker yen buoyed investor mood. All three major US stock indexes closed higher on Wednesday, helped by gains in the technology sector. The Philadelphia SE Semiconductor Index surged, with AI chipmaker Nvidia adding 8%.
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The Nikkei index closed 3.41% higher at 36,833.27 in broad-based buying. The broader Topix finished up 2.44% at 2,592.5. The yen softened after hitting its highest against the dollar this year in the previous session.
Shares of exporters, which tend to benefit from a weaker domestic currency, rebounded.
Among the Tokyo Stock Exchange’s 33 industry groupings, transport equipment, which includes automakers, climbed 2.4% and was among the top performers. Toyota Motor gained 3.8%, while Kawasaki Heavy Industries led the sector with a 6.3% rise.
Chip-making equipment giant Tokyo Electron jumped 4.8%, while Advantest, which counts Nvidia among its customers, was up 9.2%. AI-focused startup investor SoftBank Group rose about 8%.
Mainland China stocks were an outlier, edging lower as they were dragged down by consumer-related shares, while the technology sector led Hong Kong stocks higher.
Domestic demand remains a weak area in the Chinese economy, and investors are looking forward to a slew of economic and activity data including retail sales and house prices on Saturday to see if there’s any improvement.
China’s blue-chip CSI300 index was down 0.43% with, earlier in the session, its financial sector sub-index higher by 0.23%, the consumer staples sector down 1.47%, the real estate index up 0.2% and the healthcare sub-index down 0.7%.
The Shanghai Composite Index lost 0.17%, or 4.67 points, to 2,717.12, while the Shenzhen Composite Index on China’s second exchange fell 0.48%, or 7.20 points, to 1,492.33.
Chinese H-shares listed in Hong Kong – stocks belonging to companies from the Chinese mainland – rose 0.81% to 6,031.11, while the Hang Seng Index was up 0.77%, or 131.68 points, at 17,240.39.
Tech shares rose 1.4% and led the gains in Hong Kong, with delivery giant Meituan up 4%.
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And the positive mood flowed through elsewhere in Asia, with Sydney, Seoul, Singapore, Mumbai, Taipei, Manila and Jakarta also enjoying strong buying sentiment. MSCI’s broadest index of Asia-Pacific shares outside Japan rallied 1.5%.
Globally, investors are now awaiting a policy decision from the European Central Bank later in the day where a rate cut is almost a certainty, but the question remains whether it would move again in both October and December.
Europe was set for solid gains ahead of the ECB risk event, with Eurostoxx 50 futures jumping 1.3% and FTSE futures gaining 1.1%. Nasdaq futures also turned higher, last up 0.3%.
The dollar was last up another 0.3% to 142.75 yen, having been pressured earlier by hawkish comments from a senior Bank of Japan official who called for raising rates at least to 1%.
Overnight, US data showed core consumer price index (CPI) rose 0.28% in August, compared with forecasts for a rise of 0.2%. It was enough of a steer for markets to almost abandon the chance of a half-point rate cut from the Federal Reserve next week, with probability for such a move at just 15%.
The disappointment over core inflation figures had pressured Wall Street but again tech stocks came to the rescue, with AI darling Nvidia jumping, helped by a media report that the US government is considering letting the company export advanced chips to Saudi Arabia.
Short-dated US Treasuries sold off overnight. Two-year Treasury yields edged up 1 basis point to 3.66%, having risen 4 basis points overnight, while 10-year yields were at 3.6665%. That left the 2-10-year yield curve flattening slightly and barely remaining positive at less than 1 bp.
Oil extended gains on fears that Hurricane Francine could lead to lengthy production shutdowns in the US. Brent crude futures rose 0.7% to $71.09 a barrel, after gaining 2% overnight. It also found support at $68.69, the lowest level in almost three years.
Gold was 0.2% higher at $2,517.89 an ounce, just a touch below its record high of $2,531.60.
Key figures
Tokyo – Nikkei 225 > UP 3.41% at 36,833.27 (close)
Hong Kong – Hang Seng Index > UP 0.77% at 17,240.39 (close)
Shanghai – Composite < DOWN 0.17% at 2,717.12 (close)
London – FTSE 100 > UP 0.91% at 8,268.32 (0933 BST)
New York – Dow > UP 0.31% at 40,861.71 (Wednesday close)
- Reuters with additional editing by Sean O’Meara
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