Japan And Most Asian Markets Rise After Wall Street Rally

 

Most stock markets in Asia rose on Wednesday with China and Hong Kong stocks in positive territory, while Japan’s Nikkei ended above 29,000 for the first time in seven months after a rally on Wall Street.

Markets in Taiwan and Australia were also up, but stocks slipped in South Korea. The MSCI Asia-Pacific index excluding Japan gained 0.3%.

In China, some key indexes finished at multi-week highs, led by gains in developers on rising hopes that the Chinese government would roll out supportive measures to prop up the ailing property sector.

At the close, the benchmark Shanghai Composite index climbed 0.5% to record the highest closing price since July 20, while the blue-chip CSI 300 index was up 0.9%, the loftiest close since July 28.

In Hong Kong, the benchmark Hang Seng Index advanced 0.5%, while Chinese H-shares listed in Hong Kong gained 0.4%.

The property sector was among the top gainers after sources said China would guarantee new onshore bond issues by a few select private developers to support its embattled property sector, while the state planner said it would boost economic demand and speed up infrastructure projects.

The CSI real estate index jumped 3.5%. However, Chinese developers listed in Hong Kong gave back all intraday gains to ease 0.24% by the end of the session, as some analysts and economists said the policy support was far from enough.

“The policy response to the deteriorating property sector may be too slow and uncoordinated in the lead-up to the once-in-a-decade political reshuffle,” said Lu Ting, chief China economist at Nomura.

“The credit support Chinese regulators plan to provide to select developers could be of some help, though it’s far from a comprehensive solution to the big woes in the property sector.”

Separately, Premier Li Keqiang pledged that China would step up macroeconomic policy support for the economy, after a slew of key economic gauges, including credit lending data and activity indicators, showed growth unexpectedly slowed last month.

 

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Nikkei Ends About 29,000

Japan’s Nikkei ended above the key psychological level of 29,000 on Wednesday for the first time in more than seven months, after an overnight Wall Street rally in major indexes following robust earnings by US retailers.

The Nikkei share average rose 1.23% to 29,222.77, its highest close since January 5. The broader Topix advanced 1.3% to 2,006.99.

“Strong US equities lifted investor sentiment,” said Takatoshi Itoshima, a strategist at Pictet Asset Management Japan.

The Dow and S&P 500 had risen on Tuesday as stronger-than-expected results and outlooks from Walmart and Home Depot bolstered views on the health of consumers, while technology shares declined and weighed on the Nasdaq.

Uniqlo clothing store owner Fast Retailing was the biggest boost to the Nikkei, rising 2.8%, followed by air-conditioner maker Daikin Industries, up 2% and telephone company KDDI, gaining 1.4%.

Tokyo Electric Power Holdings added 3.66% on expectations of a restart of nuclear power plants after a report that the nuclear authority approved establishment of anti-terrorism facilities at a nuclear plant, a market participant said.

 

Korean Shares Fall From Two-Month High

South Korean shares fell on Wednesday, underperforming Asian peers, as automakers slumped and investors booked profit ahead of the US Federal Reserve’s meeting minutes. The Korean won weakened, while the benchmark bond yield rose.

The benchmark KOSPI ended down 17.05 points, or 0.7%, at 2,516.47, after rising for three sessions to its highest since mid-June.

Among heavyweights, technology giant Samsung Electronics fell 1% but peer SK Hynix rose 0.4%.

Hyundai Motor and Kia Corp saw their worst day since late June, down 3.8% and 4%, respectively, after US President Joe Biden signed a legislation that cuts tax credits for electric vehicles (EV) assembled outside North America.

EV battery makers LG Energy Solution fell 1.5% and Samsung SDI lost 0.5%, but SK Innovation jumped 3.2%.

 

ASX Rises After Weak Wage Data

Australian shares inched higher on Wednesday, after the country’s wage data missed estimates presenting a case for the Reserve Bank of Australia to rein in the pace of rate hikes, even as poor annual results from biotech giant CSL capped the gains.

The S&P/ASX 200 index rose 0.3% to 7,127.70. The benchmark rose 0.6% on Tuesday.

Figures from the Australian Bureau of Statistics showed wage price index rose 0.7% in the June quarter as red-hot demand for labour drove unemployment to generational lows. The data, however, missed forecasts of a 0.8% increase, leading the market to lengthen the odds on another half-point rate hike in September.

Domestic mining stocks rose 0.4% on strong base metal prices. Sector majors BHP Group and Rio Tinto both rose 0.8%.

 

Indian Shares Highest for Four Months

Indian shares closed higher on Wednesday, as investors pinned their hopes on strong earnings data amid signs of cooling inflation, sending the S&P BSE Sensex above the key 60,000 level for the first time since April 5.

The NSE Nifty 50 index closed nearly 0.7% higher at 17,944.25 while the Sensex ended 0.7% higher at 60,260.13. Both indexes clocked their highest closing level in four months.

A softening inflation has given rise to expectations the Reserve Bank of India might slow down the pace and quantum of rate hikes in the coming months.

Analysts believe domestic sentiment has been upbeat since strong corporate June-quarter results and with signs of cooling inflation, aided by softening commodity prices.

Foreign institutional investors have also been pumping money into Indian equities, having bought $2.83 billion worth of shares this month until August 12, compared with an inflow of $618 million all through July, data showed.

 

Oil at Six-Month Low

Oil hit a six-month low on Wednesday after a brief rally as concerns about the prospect of a global recession that would weaken demand overshadowed a report showing lower US crude and gasoline stocks.

Figures on Wednesday did little to improve the economic backdrop, showing British consumer price inflation jumped to 10.1% in July, its highest since February 1982, intensifying a squeeze on households.

Brent crude fell as low as $91.51, the lowest since February, and by 0931 GMT was down 5 cents at $92.29. US West Texas Intermediate (WTI) crude fell 20 cents, or 0.2%, to $86.33.

“The oil market is struggling to shake off recession fears, and there is little to suggest that this will change any time soon,” said Stephen Brennock of oil broker PVM.

 

  • Reuters with additional editing by Jim Pollard

 

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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.