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Asia Stocks Advance on US Spending Growth, China Hopes

Investor mood was boosted by consumer spending data from the United States and bets the Fed will slow down its rate hike programme

Asian stock markets rallied on Friday
Most Asian markets fell on Thursday, following remarks by the US Fed that suggest rates may stay higher for longer. Reuters file photo.


Asian stocks capped a positive week with more modest gains off the back of positive economic data from the US and general optimism over a post-Covid recovery in China, the world’s manufacturing hub.

Japan’s Nikkei posted its biggest weekly jump in more than two months while Hong Kong’s Hang Seng was still benefiting from a post-Lunar New Year holiday boost.

Figures highlighting a resilient US economy boosted investor sentiment ahead of next week’s slate of central bank policy meetings.


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And that bump was felt first in Japan where the Nikkei has now recovered all of its losses since the Bank of Japan’s surprise bonds yield tweak last month. But, caution around domestic earnings capped the gains.

The Nikkei share average inched up 0.07% to end the session at 27,382.56, after trading in negative territory. The index posted a 3.12% weekly gain, the biggest since the week ended November 11. The broader Topix was ahead 0.22%, or 4.26 points, at 1,982.66.

Toyota Motor inched up 0.4% in seesaw trade after announcing that Akio Toyoda will step down as president and chief executive to become chairman from April 1, and hand over the helm of Japan’s biggest automaker to its top branding officer, Koji Sato.

Core consumer prices in Japan’s capital, a leading indicator of nationwide trends, rose 4.3% in January from a year earlier, marking the fastest annual gain in nearly 42 years.

Hong Kong shares edged ahead, with investors locking in gains after a strong start to the new year. Mainland China markets are due to resume trading on Monday. The Hang Seng Index gained 0.54%, or 122.12 points, to 22,688.90.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.11%. Indian stocks dropped with Mumbai’s signature Nifty 50 index down 1.58%, or 283.55 points, at 17,608.40.


US Data Raises Soft Landing Hopes

Globally, European stock futures indicated that stocks were set to rise, with the Eurostoxx 50 futures up 0.3%, German DAX futures 0.28% ahead and FTSE futures up 0.16%.

The US economy grew faster than expected in the fourth quarter as consumers boosted spending on goods, data showed, but it could be the last quarter of solid GDP growth before the lagged effects of the Federal Reserve’s jumbo interest rate hikes are fully felt.

Thursday’s set of data did raise investor hopes of a soft landing – a scenario in which inflation eases against a backdrop of slowing but still resilient economic growth.

Futures are pricing in a 94.7% probability of a 25-basis-point hike next Wednesday and see the Fed’s overnight rate at 4.45% by next December, or lower than the 5.1% rate Fed officials have projected into next year.

Data on US personal consumption expenditures (PCE) due at 1330 GMT will provide further clues on inflation.

Next week will also feature Bank of England and European Central Bank meetings that will indicate the monetary policy path those central banks are likely to take.

The dollar index, which measures the US currency against six other peers, rose 0.23%, while the euro fell 0.22% to $1.0866.

Oil prices rose on expectations of a boost to demand from China’s reopening and after the strong US data. US West Texas Intermediate crude rose 0.41% to $81.34 per barrel and Brent was at $87.83, also up 0.41% on the day. 


Key figures

Tokyo – Nikkei 225 > UP 0.07% at 27,382.56 (close)

Hong Kong – Hang Seng Index > UP 0.54% at 22,688.90 (close)

Shanghai – Composite <> CLOSED

London – FTSE 100 > UP 0.18% at 7,774.99 (0935 GMT)

New York – Dow > UP 0.61% at 33,949.41 (Thursday close)


  • Reuters with additional editing by Sean O’Meara


Read more:

BOJ Urged by IMF to Loosen Reins on Long-Term Yields

Hang Seng Leads Asia Rally But Nikkei Slips on US Data Fears



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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