Asian stocks rallied on Wednesday buoyed by returning optimism over a turnaround in US interest rates, pushing down bond yields.
Benchmark 10-year Japanese government bond yields dipped to their lowest since mid-August, tracking an overnight slide for equivalent US Treasury yields as cooling labour market data strengthened views that the Federal Reserve could be, finally, done raising rates.
Japan’s Nikkei share average rose sharply, erasing losses from the previous three sessions as investors bought back beaten-down chip-related stocks.
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The Nikkei index jumped 2.04% to close at 33,445.90, posting its biggest daily gain since November 15. The broader Topix rose 1.90% to 2,387.20.
Chip-making equipment manufacturer Tokyo Electron rose 2.2% and chip-testing equipment maker Advantest gained 3%.
Sakura Internet surged 12.09%, marking a sharp rally for the third consecutive session as Nvidia CEO Jensen Huang said this week the US semiconductor giant would work with Japanese companies such as Sakura Internet to build artificial intelligence factories for Japan.
Shares of the cloud service provider have gained a whopping 93% in the past month.
China’s blue-chip stocks, though, slumped to an almost five-year trough while the Chinese yuan extended losses, with market sentiment fragile after ratings agency Moody’s cut China’s credit outlook.
Moody’s issued a downgrade warning on China’s credit rating on Tuesday, saying costs to bail out local governments and state firms and control its property crisis would weigh on the world’s second-largest economy.
The CSI300 Index touched its lowest level since February 2019 before rallying to end 0.16% up on the day. The Shanghai Composite Index fell 0.11%, or 3.36 points, to 2,968.93, but the Shenzhen Composite Index on China’s second exchange was up 0.55%, or 10.13 points, to 1,855.16.
The Hang Seng Index, meanwhile, rebounded to gain 0.83%, or 135.40 points, and close at 16,463.26.
Elsewhere across the region, in earlier trade, Sydney was higher while Singapore, Seoul, Bangkok, Mumbai, Wellington, Taipei and Jakarta were also on the rise.
US Dollar Rebounds
US stock futures pointed higher, with the tech-heavy Nasdaq indicated up 0.41% after a 0.31% advance overnight for the cash index. S&P 500 futures rose 0.29%, after the cash index ended Tuesday flat.
UK FTSE futures, Germany’s DAX futures and pan-European Eurostoxx 50 futures each added about 0.3%.
Overnight, US jobs figures came in softer than expected, but coupled with robust services data, added to the narrative for a soft landing for the economy as the Fed shifts to monetary easing, analysts said.
With markets all but certain the Fed’s next move is a cut, dovish rhetoric from European Central Bank officials and the Reserve Bank of Australia’s decision to hold policy steady on Tuesday have stoked bets for a peak in rates globally.
The Bank of Canada is widely expected to adopt a wait-and-see attitude on Wednesday as well.
That has supported the US currency’s rebound from last week’s nearly four-month low versus major peers, with the US dollar index steady around 103.95 on Wednesday, compared with a trough of 102.46 a week ago.
The dollar added 0.06% to 147.22 yen, while the euro slipped 0.04% to $1.0792.
Bitcoin was slightly lower at around $43,560 after pushing as high as $44,490 overnight, buoyed by both Fed rate cut expectations and speculation US regulators will soon approve exchange-traded spot bitcoin funds.
Gold edged up 0.2% to $2,023, catching its breath following its surge to a record $2,135.40 on Monday.
Crude was steady on Wednesday, nursing its wounds after closing at five-month lows in the previous session amid a worsening demand outlook from China and doubts about the impact of OPEC cuts.
Key figures
Tokyo – Nikkei 225 > UP 2.04% at 33,445.90 (close)
Hong Kong – Hang Seng Index > UP 0.83% at 16,463.26 (close)
Shanghai – Composite < DOWN 0.11% at 2,968.93 (close)
London – FTSE 100 > UP 0.34% at 7,515.58 (0935 GMT)
New York – Dow < DOWN 0.22% at 36,124.56 (Tuesday close)
- Reuters with additional editing by Sean O’Meara
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