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Asia Shares Rally as Wall Street Surges on Rate Hike Hopes

Weaker US manufacturing figures raised expectations among Asian investors of a softer rate stance by the Federal Reserve

People walk past an electric board showing Japan's Nikkei share average in Tokyo, Japan September 14, 2022. REUTERS/Issei Kato
People walk past an electric board showing Japan's Nikkei share average in Tokyo, Japan. Photo: Reuters


Asia stocks rallied on Tuesday as the bargain-buyers swooped and investors were buoyed by a strong Wall Street showing.

Sentiment across the region was also boosted by weak US manufacturing data, raising hopes of a softer rate stance by the Federal Reserve, and by Britain’s U-turn on scrapping its highest tax rate.

Japan’s Nikkei jumped 3% to record its best session in more than six months, as investors scooped up beaten-down heavyweights and growth stocks after Wall Street closed sharply higher overnight.


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The Nikkei share average advanced 2.96% to 26,992.21 in broad-based buying, marking its biggest daily gain since March 23, and posting its highest close since September 22.

The broader Topix jumped 3.2% to 1,906.89 in its sharpest daily gain since March 10.

Traders shrugged off news that nuclear-armed North Korea fired a ballistic missile over Japan for the first time in five years earlier in the day.

Uniqlo clothing shop owner Fast Retailing rose 2% and was the biggest boost for the Nikkei, followed by technology investor SoftBank Group, jumping 5.1%, and chip-making equipment maker Tokyo Electron, which rose 2.7%.

Energy shares also advanced, as oil prices rose after the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, said it would consider reducing output.

In trade thinned by holidays in China and Hong Kong, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.7%, led by gains in Australia. 

Elsewhere across the region, Philippine stocks jumped as much as 3% to mark their best session in almost a month. 

The South Korean benchmark advanced more than 2.5% in its best day in three weeks, led by gains in heavyweight chipmakers such as Samsung Electronics and peer SK Hynix.  

Indexes in Indonesia, Malaysia, Taiwan and Thailand rose between 0.7% and 2.1%. Indian stocks jumped with Mumbai’s signature Nifty 50 index up 2.2%, or 376.25 points, at 17,263.60.


US Non-Farm Payrolls Data

Globally, Wall Street indexes finished more than 2% higher overnight as Treasury yields tumbled after US manufacturing activity rose at its slowest pace in nearly two and a half years, raising fears that the Fed’s aggressive stance might be hurting demand.

“In this hawkishly priced risk environment, bad data is considered good news, as it raises the possibility of a dovish pivot by the Fed,” SPI Management analysts said in a note.

Investors will now eye US non-farm payrolls data due later this week and key inflation data next week, which could indicate the trajectory of rate hikes by the nation’s central bank.   

Also aiding overall risk confidence on Tuesday was a backdown in policy by British Prime Minister Liz Truss over her mini-budget announced last week containing massive tax cuts, which had resulted in a wipe-out across global markets. 

Australia’s central bank added to that sense of relief in markets, surprising investors by lifting interest rates by a smaller-than-expected 25 basis points, saying they had already risen substantially.

That pushed the Aussie dollar down, but lifted the S&P/ASX 200 index by 3.6% and spurred benchmark 3-year bonds for their best day in 13 years.


Sterling Recovery Settles Nerves

The recovery for sterling has settled some nerves in the currency market, though the persistent strength of the dollar still holds a lot of major currencies near milestone lows and has authorities throughout Asia on edge.

Japan’s yen hit 145 to the dollar on Monday – a level that prompted official intervention last week – and was last at 144.71.

Chinese authorities have rolled out manoeuvres to support the yuan ranging from unusually strong signals to the market to administrative measures that raise the cost of shorting it.

“More volatility is almost certainly assured as FX markets re-focus on US recession risks, which continue to build,” ANZ senior economist Miles Workman said.

Oil held overnight gains on news of possible production cuts, and Brent futures were last up 43 cents to $89.29 a barrel.


Key figures

Tokyo – Nikkei 225 > UP 2.96% at 26,992.21 (close)

Hong Kong – Hang Seng Index <> CLOSED

Shanghai – Composite <> CLOSED

London – FTSE 100 > UP 1.61% at 7,020.20 (0935 BST)

New York – Dow > UP 2.66% at 29,490.89 (Monday 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.


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