Asia Markets Advance on Easing Fed Fears, Ukraine War Gains

 

Asian stock markets began the week in green on Monday, picking up where a Wall Street rally left off on Friday with fears easing over the pace of planned US Fed rate hikes.

Japan finished the day at a two-week high while stocks in Taipei settled 1.5% higher in their best session in a month. Hong Kong and mainland China markets were closed for a holiday.

Japan’s Nikkei index tracked Wall Street’s solid finish last week – where major indexes posted their first weekly gain in four weeks – with heavyweights and travel-related stocks leading the gains.

 

Also on AF: US to Ban Export of Chips, Chipmaking Tools to China

 

The Nikkei rose 1.16% to 28,542.11, its highest closing level since August 26. The broader Topix gained 0.75% to 1,980.22.

Travel and retail shares gained after a report said Japan’s government is considering scrapping its cap on the daily arrivals of overseas visitors by October.

Elsewhere across the region, shares in Manila and Bangkok were also firmer while markets in South Korea were also shut.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.7%, having bounced modestly from a two-year low last week.

“A weaker dollar is providing some boost to risk appetite. Markets are taking their cue from the price action on Friday in the US,” said Irene Cheung, a senior Asia strategist at ANZ in Singapore.

Indian stocks rallied too with Mumbai’s signature Nifty 50 index up 0.73%, or 130.10 points, at 17,963.45.

 

US Dollar Index Drops

Meanwhile, European shares jumped after Ukrainian forces made a rapid advance in Kharkiv province in Russia’s worst setback since its Kyiv push was abandoned in March, while the euro extended on last week’s European Central Bank inspired gains.

The broad pan-European STOXX 600 index was up 0.7% in early trade, hitting its highest since the end of August.

“The Russia-Ukraine situation is creating some glimmers of hope for the market that there might be a resolution and provide some relief on the intensity of the energy shock,” Hani Redha, a multi-asset portfolio manager at PineBridge Investments, said.

The dollar index, which measures the greenback against a basket of six currencies, was down 0.7% to 107.98, its lowest since August 26.

Still, the index is up over 12% this year, having gained over 10% against the euro, 13% against the pound and 24% against the Japanese yen.

 

Oil Prices Steady

US inflation data released on Tuesday will be key for determining the direction of equities and more in the near-term.

A soft number might revive speculation the Federal Reserve will only hike by 50 basis points this month, though it would likely have to be very weak to have a real impact given how stridently hawkish policymakers have been recently.

Oil prices have been trending lower amid concerns about a global economic slowdown, though cuts to supply did prompt a 4% bounce on Friday.

On Monday, Brent was steady at $92.82 a barrel, while US crude slipped 0.2% to $86.60.

 

Key figures

Tokyo – Nikkei 225 > UP 1.16% at 28,542.11 (close)

Hong Kong – Hang Seng Index > UP 2.69% at 19,362.25 (Friday close)

Shanghai – Composite > UP 0.82% at 3,262.05 (Friday close)

New York – Dow > UP 1.19% at 32,151.71 (Friday close)

 

  • Reuters with additional editing by Sean O’Meara

 

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Sean O’Meara

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.