Asian Markets Rally Again After Fed Rate Rise, China Boost

The Hang Seng advanced another 7% and stocks across the region benefited as the Fed finally announced its first interest rate rise in more than three years

 

Hong Kong’s Hang Seng recorded another spectacular day as Asia’s major markets continued their revival this week after China said it will step in to support its slowing economy and the Federal Reserve pressed ahead with the first US interest rate rise in more than three years.

Hong Kong stocks stacked up another massive gain on Thursday, following Wednesday’s 9% surge, as investors piled back in after China’s pledge to support its markets.

Concerns about a sharp slowdown in China, which is battling a spreading Covid-19 outbreak with ultra-restrictive measures, were calmed after its Vice Premier Liu He signalled on Wednesday more stimulus was on the way.

 

Also on AF: China Stocks Extend Surge on State Backing, Ukraine Hopes

 

The Hang Seng Index jumped 7.04%, or 1,413.73 points, to 21,501.23. The Shanghai Composite Index rose 1.40%, or 44.33 points, to 3,215.03, while the Shenzhen Composite Index on China’s second exchange added 2.24%, or 46.76 points, to 2,133.01.

Beaten down sectors including tech and real estate soared, with Country Garden Services Holdings and Country Garden Holdings climbing about 28% and 26%, respectively. 

Online giant Alibaba leapt 9%, China’s blue chips gained 2.3%, extending the previous day’s 4.3% rebound while Japan also saw outsized gains, with the Nikkei touching a two-week peak.

The Nikkei 225 index rose 3.46% or 890.88 points to close at 26,652.89, while the broader Topix index added 2.47% or 45.76 points to 1,899.01.

Indian stocks had a good day too with Mumbai’s signature Nifty 50 index up 1.84%, or 311.70 points, to close at 17,287.05.

 

Traders’ Ukraine Peace Hopes

Traders remained gripped by the war in Ukraine but with hopes of possible a peace deal faint but alive they were also watching to see if the Bank of England raises UK interest rates again later too.     

Sanctions-ravaged Russia’s ongoing shelling of Ukraine meant commodity markets continued to gyrate wildly with oil prices back over the symbolic $100 level again.

Metals markets faced more drama after nickel trading had to be halted again on London Metal Exchange again on Wednesday.

The stock market gains had followed a 2.2% surge on Wall Street’s S&P 500 overnight.

Bond markets meanwhile were beginning to settle after Treasury yields had spiked to nearly three-year highs following the Fed’s signal that it also planned to hike the rate at every meeting for the remainder of this year to aggressively curb inflation.

 

Dollar On The Back Foot

Ten-year Treasuries were last at 2.12% while Germany’s benchmark 10-year Bund yield slipped back 2 basis points to 0.382% having started the day edging higher, extending the previous session’s gains to hit 0.408%, its highest since November 2018.

The more upbeat sentiment in recent days means there are “fewer excuses for central banks to delay policy tightening,” ING rates strategists said in a note to clients.

The dollar, though, remained on the back foot in the FX markets. The dollar index, which tracks it against six other major currencies, was slightly weaker at 98.476 after also dropping 0.5% on Wednesday.

Where the dollar showed some strength was against Japan’s currency, standing at 118.82 yen, not too far from the more than six-year high of 119.13 reached overnight amid a widening monetary policy gap. 

The Bank of Japan is widely seen keeping its vast stimulus programme in place on Friday as the economy there continues to struggle.  

 

Key figures around 0820 GMT

Hong Kong – Hang Seng Index > UP 7.0% at 21,501.23 (close)

Tokyo – Nikkei 225 > UP 3.5% at 26,652.88 (close)

Shanghai – Composite > UP 1.4% at 3,215.04 (close)

London – FTSE 100 > UP 0.5% at 7,325.70

Brent North Sea crude > UP 3.8% at $101.75 per barrel

West Texas Intermediate > UP 3.5% at $98.33 per barrel

New York – DOW > UP 1.6% at 34,063.10 (Wednesday close)

 

  • Reuters with additional editing by Sean O’Meara

 

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Sean OMeara

Sean O’Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.