Asian stocks rallied on Thursday as revived hopes of a US turnaround on interest rates lifted the mood while currency shifts also boosted sentiment.
Some of the gains were due to supply disruptions and geopolitical tensions, but they also reflected optimism about global growth given a recovery in recent factory surveys (PMI), particularly for China.
Japan’s Nikkei share average ended higher, as investors scooped up stocks following a heavy profit-booking sell-off earlier this week as the new financial year started.
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The Nikkei rose 0.81% to close at 39,773.14, after rising as much as 2% to cross 40,000. The broader Topix ended 0.94% higher at 2,732.00.
Chip-related Socionext surged 17.55% to a daily limit high after Morgan Stanley MUFG Securities raised its rating. Robot maker Fanuc rose 3.16% and technology start-up investor SoftBank Group climbed 1.07%.
But the Nikkei has now lost 4.6% from a record-high scaled on March 22 to the previous session’s low. The index hit successive record highs in March, after crossing levels last seen in 1989 during the country’s bubble economy on February 22.
Elsewhere across the region, in earlier trade, Sydney, Seoul, Singapore Mumbai and Jakarta were all in the green, though there were small losses in Manila and Wellington. Hong Kong and Shanghai were closed for holidays.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.4%, though the holiday in China made for thinner trading conditions.
Eurostoxx 50 futures and FTSE futures both edged up 0.1%. S&P 500 futures rose 0.3% and Nasdaq futures 0.4%.
Global sentiment was aided by a reaffirmation from Federal Reserve Chair Jerome Powell that US rates were still on course to be cut this year, though the timing was data dependent.
The case for easing was underpinned by a survey of the US services sector that showed its index of prices paid fell to the lowest since March 2020, offsetting a worrying rise in the survey of manufacturing released early this week.
Fed fund futures have already lowered the chance of a June move to 62% from 74% a month ago.
Yet the bigger shift has been in how fast and far rates are expected to fall, with roughly 73 basis points priced in for this year compared to more than 140 basis points in January.
Treasuries Yields
Investors have also taken 100 basis points of easing out of 2025, so that rates are now seen ending next year at around 4% rather than 3%.
That sea change has left Treasuries under water, with 10-year yields hitting a four-month high of 4.429% on Wednesday before easing back a little to 4.368% currently.
The rise in yields has been generally supportive of the dollar, though it did lose some ground following Wednesday’s US services survey.
That left the euro at $1.0843, after rallying 0.6% overnight, while the dollar index stood at 104.21 having fallen 0.5% the previous session.
While the risk of Japanese intervention kept the dollar at 151.65 yen and shy of the 152.00 barrier, other currencies were not so inhibited and the yen fell sharply elsewhere.
The euro was up at 164.44 yen, having climbed 0.7% on Wednesday to recover four days of losses, and the Canadian dollar reached a 16-year high at 112.31 yen.
Gold extended its sparkling run to reach a fresh record at $2,304 an ounce. The metal has climbed 13% since the start of February.
Oil prices have also been on a charge as Ukraine’s attacks on Russian refineries have cut fuel supply and amid concerns that the Israel-Hamas war in Gaza may spread to include Iran, possibly disrupting supplies from the Middle East.
A meeting of top ministers from the Organization of Petroleum Exporting Countries (OPEC) and its allies including Russia kept oil supply policy unchanged on Wednesday and pressed some countries to boost compliance with output cuts.
Key figures
Tokyo – Nikkei 225 > UP 0.81% at 39,773.14 (close)
Hong Kong – Hang Seng Index <> CLOSED
Shanghai – Composite <> CLOSED
London – FTSE 100 > UP 0.39% at 7,968.58 (0933 GMT)
New York – Dow < DOWN 0.11% at 39,127.14 (Wednesday close)
- Reuters with additional editing by Sean O’Meara
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