Asia Markets Lifted by Rate Easing Hopes as Hang Seng Surges

 

Asia stocks advanced on Wednesday with a surging Hong Kong leading the way as hopes of a slowdown in central bank tightening lifted sentiment across trading floors.

In a rare day of good news, the Nikkei ended above the key 27,000-level for first time in two weeks while Hong Kong stocks rose more than 5%, boosted by its tech stocks and signs that recent rate hikes were slowing down inflation. 

Japan’s Nikkei was lifted by retailers, although sentiment remained tentative compared with global peers, like the Hang Seng, buoyed by the prospect of central banks tempering their aggressive tightening policies.

 

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The Nikkei share average closed 0.48% higher at 27,120.53 while the broader Topix index gained 0.32%. But investors generally remain cautious and eyes will be on the release of key US jobs data later in the day.

“The Reserve Bank of Australia may have slowed the pace of its interest rate hikes, but it’s unclear whether the US Federal Reserve will follow,” said Masahiro Yamaguchi, head of investment research at SMBC Trust Bank. “We still need to watch for economic data and statements from Fed officials.”

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 2.6%, while the S&P 500 index and the Nasdaq 100 each gained more than 3% overnight.

Hong Kong’s Hang Seng Index gained 5.90%, pushed higher by a 7% lift in tech stocks and traders catching up after a day’s holiday. Mainland Chinese markets remain closed for holidays.

It was the Hang Seng’s best day in almost seven weeks, as hopes grew that global central banks could slow the pace of interest rate hikes amid early signs previous policy tightening was working.

The Hang Seng index closed 1,008.46 points higher at 18,087.97, with consumer discretionary stocks leading the rally. The Hang Seng China Enterprises index rose 6.28% to 6,224.61.

The sub-index of the Hang Seng tracking energy shares rose 3.7%, while the IT sector gained 7.27%, the financial sector ended 6.07% higher and the property sector climbed 2.63%.

The top gainers in the Hang Seng Tech Index were JD.Com, which jumped 10.1%, BYD Electronic, which surged 9.5%, and Kingsoft, which was up 9.1%.

 

Philippines Flat, India Closed

Elsewhere across the region, benchmark stock indexes across Indonesia, Singapore, Malaysia and Thailand firmed between 0.2% and 1%. India’s markets were closed for a holiday.

Philippines stocks traded almost flat, after the country’s inflation accelerated to a four-year high, raising the chances of more rate hikes.

Globally, world stocks clung to two-week highs, although another aggressive rate increase from New Zealand tempered the idea that central banks may be close to slowing down the pace of rapid monetary tightening.

Oil prices were little changed before a meeting of OPEC+ producers to discuss a big cut in crude output after gaining more than 3% in the previous session.

OPEC+, which includes Russia and Saudi Arabia, could cut between 1 and 2 million barrels a day, according to a Reuters report.

 

European Shares Fall

Yields on 10-year US Treasuries, which move inversely to prices, meanwhile are down 12 basis points just this week, as hopes for a slowdown in rapid Fed tightening took hold.

Maximilian Kunkel, chief investment officer for Germany and global family and institutional wealth at UBS, said talk of rate hikes slowing down was premature.

“To us, especially when we think about central bank actions, it is too early to call for the Fed to pause imminently,” he said. “We need indications of a clear downtrend in US inflation… and further signs of a cooling of the labour market. And we’re not there yet.”

European shares fell, after rallying more than 5% in the previous three sessions. Europe’s broad STOXX 600 index was down 1%, while blue-chip indices in London, Paris and Frankfurt were down as much as 0.5%.

The dollar was 0.2% firmer at 144.40 yen, while the euro was around 0.4% softer at $0.9945, having gained 1.7% on Tuesday in its biggest one-day percentage gain since March.

 

Key figures

Tokyo – Nikkei 225 > UP 0.48% at 27,120.53 (close)

Hong Kong – Hang Seng Index > UP 5.90% at 18,087.97 (close)

Shanghai – Composite <> CLOSED

London – FTSE 100 < DOWN 1.15% at 7,005.21 (0935 BST)

New York – Dow > UP 2.80% at 30,316.32 (Tuesday close)

 

• Reuters with additional editing by Sean O’Meara

 

 

 

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