Asian stocks advanced on Tuesday with investor mood buoyed by increasing optimism that the US Fed may soon signal its intent to cut rates.
That fuelled a Wall Street rally which in turn fed into Asia’s markets, though mainland China and Hong Kong shares bucked the trend as more poor data and a lack of stimulus options from Beijing weighed.
But Japan’s Nikkei share average led the majority higher, supported by a softer yen and technology share gains, as the encouraging US economic outlook continued to support risk appetite globally.
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The Nikkei rose more than 2% during the session before finishing up 1.80% at 38,062.92, its highest closing level since August 1. The broader Topix rose 1.11% to 2,670.54.
Domestic tech stocks tracked their US peers higher to help lift the overall benchmark index, as Wall Street continued to rebound from a steep sell-off seen two weeks ago.
Recent US data has revived expectations of a soft landing for the world’s largest economy. Market players are now looking to Federal Reserve Chair Jerome Powell’s remarks on Friday at the Jackson Hole Economic Symposium for more hints on the Fed’s rate path.
AI-focused startup investor SoftBank Group gained 3.1%, while chip-related shares in Tokyo Electron and Advantest rallied 1.6% and 2.1%, respectively.
China and Hong Kong stocks, though, took a hit as recent economic indicators provided little comfort and the absence of new stimulus policies kept investors cautious. China maintained its benchmark lending rates, aligning with market expectations.
Coal stocks led the decline, affected by sluggish mid-year earnings and disappointing demand. Economists at Goldman Sachs highlighted rising downside risks to China’s growth, noting that continued restrictive fiscal policy could further slow the economy.
The Shanghai Composite index dropped by 0.93%, or 27.01 points, to 2,866.66, while the blue-chip CSI300 index saw a 0.72% decrease. The Shenzhen Composite Index on China’s second exchange retreated 1.41%, or 21.77 points, to 1,525.68 as sector indices for consumer staples, real estate and healthcare fell.
The Hang Seng Index in Hong Kong was down 0.33%, or 58.49 points, to 17,511.08, as Chinese H-shares dipped by 0.5%. Meanwhile, the yuan weakened slightly against the US dollar, quoted at 7.146 per dollar.
Elsewhere across the region, in earlier trade, Sydney, Seoul, Singapore, Mumbai, Taipei, Manila and Jakarta were up but Wellington dipped. MSCI’s broadest index of Asia-Pacific shares outside Japan hit a one-month top before giving up some gains to trade 0.23% higher.
Jackson Hole Summit
US stock futures similarly rose, with S&P 500 futures last up 0.02% while Nasdaq futures advanced 0.12%. Eurostoxx 50 futures gained 0.1%, though FTSE futures fell 0.32%.
With the data calendar relatively light across major economies this week, all eyes are on Wednesday’s release of the Fed’s July meeting minutes and Chair Powell’s speech on Friday.
Fed policymakers have in recent days signalled a potential rate easing in September, priming markets for a similar tone from Powell and other speakers at the annual meeting of global central bankers and other policymakers in Jackson Hole, Wyoming.
The expectations of a dovish Fed outcome this week left the dollar struggling at an over seven-month low against the euro, which peaked at $1.108775 on Tuesday.
Sterling hovered near a one-month high and last bought $1.2978 and the dollar index was last marginally higher at 101.94, having fallen to its lowest since early January of 101.76 earlier in the session.
Against the yen, the dollar rose 0.27% to 146.99, with traders also looking to Bank of Japan (BOJ) Governor Kazuo Ueda’s appearance in parliament on Friday, where he is set to discuss the central bank’s decision last month to raise interest rates.
The BOJ’s hawkish tilt had injected huge volatility into markets as investors aggressively unwound yen-funded carry trades, rocking stocks globally.
The market turmoil has since abated after BOJ Deputy Governor Shinichi Uchida earlier this month played down the chance of further rate hikes in the near term.
In commodities, oil prices edged lower on easing worries about a supply disruption in the Middle East, with Brent crude last down 0.79% at $77.05 a barrel. US crude eased 0.83% to $73.75 per barrel.
Spot gold hovered near a record high and was last at $2,502.50 an ounce, drawing support from a broadly weaker dollar and on expectations of imminent US rate cuts.
Key figures
Tokyo – Nikkei 225 > UP 1.80% at 38,062.92 (close)
Hong Kong – Hang Seng Index < DOWN 0.33% at 17,511.08 (close)
Shanghai – Composite < DOWN 0.93% at 2,866.66 (close)
London – FTSE 100 < DOWN 0.57% at 8,309.65 (0934 BST)
New York – Dow > UP 0.58% at 40,896.53 (Monday close)
- Reuters with additional editing by Sean O’Meara
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