Asian shares bounced back on Tuesday, boosted by signs the US Fed was finally ready to ease back on its rates push.
Bond yields cooled, lifted by dovish Federal Reserve remarks and a dip in oil prices after Monday’s surge, but the markets remained cautious amid violence in the Middle East.
Japan’s Nikkei share average recorded its largest daily gain in nine months, led by energy-related shares, as buoyant risk appetite spilled over from Wall Street and investors scooped up beaten-down stocks.
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The Nikkei closed 2.43% higher at 31,746.53, posting its biggest daily gain since January 18. The index fell to an over four-month low last week and posted its third straight weekly loss.
The broader Topix ended 2.12% higher at 2,312.19 on Tuesday, its largest daily gain in about a year.
Energy explorers surged about 8.5% as oil prices jumped at the start of the week after military clashes between Israel and the Palestinian Islamist group Hamas ignited fears that a wider conflict could hit oil supply from the Middle East. Refiners rose more than 5%.
Chinese stocks declined as investors rushed to sell companies with exposure to the Middle East, while the Hong Kong market gained driven by those dovish comments from US Federal Reserve officials.
China’s blue-chip CSI 300 Index dropped 0.75%, while the Shanghai Composite Index fell 0.70%, or 21.69 points, to 3,075.24. The Shenzhen Composite Index on China’s second exchange edged back 0.38%, or 7.31 points, to 1,901.33.
Meanwhile, China said its Commerce Minister Wang Wentao and US senators led by Senate Majority Leader Chuck Schumer held “rational and pragmatic” discussions on Monday.
Hong Kong’s Hang Seng Index gained 0.84%, or 147.33 points, to close at 17,664.73, while the Hang Seng China Enterprises Index climbed 0.90%.
Ailing real estate giant Country Garden fell 3.6% after the embattled property developer said it might not be able to meet all of its offshore payment obligations when due or within the relevant grace periods.
Elsewhere across the region, in earlier trade, Sydney, Seoul, Mumbai and Singapore were more than 1% higher. Wellington, Manila and Jakarta were also in positive territory. MSCI’s gauge of Asia Pacific stocks outside Japan narrowed morning gains to rise 0.81%.
Gaza Blockade Begins
Europe and US markets also looked set to open higher, with FTSE futures up 0.78% and E-mini futures for the S&P 500 index up 0.07% at 0504 GMT.
Top Fed officials indicated on Monday that rising Treasury yields could steer the central bank from further rate increases, helping to spur a rise in bond prices after those markets had been closed the previous day in the US and Tokyo.
A series of economic and trade data, including US inflation and China credit and trade data, are due to be released in the next week.
Markets are keeping a close watch, however, on the military clashes between Israel and Hamas, after its surprise strike on Saturday that killed hundreds of Israelis.
The Israeli military has since said it called up an unprecedented 300,000 reservists and was imposing a total blockade on the Gaza Strip, raising expectations of a possible ground assault.
US stocks ended higher on Monday, with energy shares rising along with oil prices. The S&P 500 energy index ended up 3.5%.
Oil prices eased after climbing more than 4% on Monday. Brent crude fell 0.44% to $87.76 a barrel as of 0535 GMT, while US West Texas Intermediate crude eased 0.49% to $85.96 a barrel.
Spot gold gave up earlier gains to hover around $1,860.6 per ounce, after scaling a one-week high on Monday as investors sought safe havens.
The dollar softened on Tuesday along with US interest rate expectations. Asian currencies edge lower.
Ten-year Treasury yields, which have been surging, fell 12 basis points to 4.67%.
Key figures
Tokyo – Nikkei 225 > UP 2.43% at 31,746.53 (close)
Hong Kong – Hang Seng Index > UP 0.84% at 17,664.73 (close)
Shanghai – Composite < DOWN 0.70% at 3,075.24 (close)
London – FTSE 100 > UP 1.53% at 7,606.77 (0933 BST)
New York – Dow > UP 0.59% at 33,604.65 (Monday close)
- Reuters with additional editing by Sean O’Meara
Read more:
China Funds Seek Backers in Middle East as US Investors Retreat
China’s Country Garden Stocks Plunge on Foreign Debt Warning
Economic Risks Mount for Asia as Israel Declares War on Hamas
Hang Seng Gains But Israel, China Data Weigh; Nikkei Closed
