Asian shares rallied on Tuesday as investors positioned themselves ahead of a slew of big data releases this week with Japan’s Nikkei the star performer, hitting another 33-year high.
Traders are waiting on key US inflation data and the Federal Reserve’s latest interest rate decision and will also be closely monitoring US consumer and producer inflation figures.
China shares were also lifted after the central bank lowered a short-term policy lending rate in a bid to restore market confidence but it was Tokyo’s Nikkei which claimed the headlines.
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Japan’s benchmark gauge surged, closing over 33,000 for the first time in 33 years, led by technology shares on expectations of a flood of investment in chip-related companies.
The Nikkei climbed for a third-straight session, adding 1.80% to 33,018.65, closing above the key psychological level for the first time since July 1990. The broader Topix gained 1.16% to 2,264.79.
SoftBank Group Corp jumped 5.25% on reports it may team up on an AI venture with ChatGPT operator OpenAI and that its semiconductor unit Arm is in investment talks with Intel Corp.
And Toyota Motor Corp shares leapt 4.99% after the automaker announced plans to market next-generation battery electronic vehicles (EVs) from 2026.
China stocks recouped early losses after its central bank lowered a short-term policy lending rate, although economic worries and geopolitical risks limited gains.
The People’s Bank of China (PBOC) cut its seven-day reverse repo rate by 10 basis points to 1.90% from 2% on Tuesday, in a bid to prop up a stalling post-pandemic recovery. It’s the first time the PBOC cut its short-term lending rates in 10 months.
Recent economic data has shown subdued demand and weaker investor sentiment, raising expectations that authorities will ease monetary policy to sustain growth.
The Shanghai Composite Index rose 0.15%, or 4.84 points, to 3,233.67, while the Shenzhen Composite Index on China’s second exchange edged up 0.62%, or 12.61 points, to 2,033.79.
Shares in artificial intelligence companies jumped nearly 3%, while information technology and media firms climbed more than 2% each.
Alibaba, Tencent Stocks Advance
In Hong Kong, tech giants advanced roughly 2%, with Alibaba and Tencent up 3% and 1.8%, respectively. The Hang Seng Index advanced 0.60%, or 117.11 points, to 19,521.42 and the China Enterprises Index added 0.50%.
Elsewhere across the region, in earlier trade, Seoul, Wellington and Taipei rose but Sydney, Singapore, Manila and Jakarta were in negative territory.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.8%.
European markets were set for a higher open, with pan-region Euro Stoxx 50 futures up 0.69%, German DAX futures rising 0.68% and FTSE futures advancing 0.41%.
On Monday, the S&P 500 and the Nasdaq rallied to their highest closing levels since April 2022.
Lifted by gains in market heavyweights Amazon, Apple and Tesla, the S&P 500 has recovered 21% from its October 2022 lows, heralding the start of a new bull market as defined by some market participants.
The S&P 500 climbed 0.93% to end the session at 4,338.93 points. The Nasdaq gained 1.53%, while the Dow Jones Industrial Average rose 0.56%.
ECB Rate Decision, BOJ Set to Stand Firm
While the Fed is expected to keep rates steady, surprise rate hikes by the Reserve Bank of Australia and the Bank of Canada last week have kept investors alert to the idea of prolonged tightening cycles.
The European Central Bank will deliver its rate decision on Thursday with analysts expecting it to raise rates by 25 basis points (bps) and to signal that there is more ground to cover. But the Bank of Japan, which will announce its plan on Friday, is expected to maintain its ultra-loose policy.
In US Treasuries, the yield on benchmark 10-year Treasury notes reached 3.7299%, compared with the US close of 3.765% on Monday. The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 4.5605% compared with a US close of 4.592%.
In currencies, the US dollar index, which measures the greenback against a basket of major currencies, fell 0.21% to 103.36, while the euro was up 0.3% on the day at $1.0792. The dollar dropped 0.1% against the yen to 139.46.
US crude ticked up 0.33% to $67.34 a barrel. Brent crude rose to $72.2 per barrel.
Key figures
Tokyo – Nikkei 225 > UP 1.80% at 33,018.65 (close)
Hong Kong – Hang Seng Index > UP 0.60% at 19,521.42 (close)
Shanghai – Composite > UP 0.15% at 3,233.67 (close)
London – FTSE 100 > UP 0.16% at 7,582.87 (0934 GMT)
New York – Dow > UP 0.56% at 34,066.33 (Monday close)
- Reuters with additional editing by Sean O’Meara
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