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Asia Stocks Rally After Dollar, Sterling Storm Sell-Off

There was some minor respite following Monday’s currency turbulence, which saw a surging dollar and falling pound send a shockwave across trading floors


Asia stock markets
MSCI's broadest index of Asia-Pacific shares outside Japan eased on Monday.

 

Asian stocks enjoyed a minor rally on Tuesday as bargain-buyers moved in after a turbulent start to the week, which saw a global sell-off and tumbling currencies.

A soaring US dollar and plummeting British pound have added to investors’ woes, with the economic outlook already gloomy as central banks look to tighten further to cap soaring prices.

But there was some small respite for traders across the region as investors scooped up beaten-down shares.

 

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Japan’s Nikkei share average ended higher on Tuesday, led by heavyweight Fast Retailing. The Nikkei gained 0.53% to close at 26,571.87, recovering from a two-month low in the previous session. The broader Topix rose 0.47% to 1,837.01.

Across the East China Sea, China shares edged higher after a four-session losing streak, as consumer and tourism stocks rebounded ahead of a week-long National Day holiday and amid some easing of Covid restrictions in Hong Kong and Macau.

Also, it emerged China’s securities regulators recently told some fund managers and brokers to avoid massive equity sales ahead of next month’s Communist Party Congress, in an effort to curb any anxiety over big market fluctuations, two sources said.

The Shanghai Composite Index was up 1.4%, or 42.64 points, to 3,093.86, while the Shenzhen Composite Index on China’s second exchange advanced 2.1%, or 40.4 points, to 1,989.40.

Hong Kong’s main stock benchmark, meanwhile, was flat and hovered around an 11-year low, amid aggressive overseas monetary policy tightening and recession worries.

Tech giants listed in the territory lost 1.7%, with Alibaba Group and Tencent Holdings shedding more than 2.5% each.

Shares in Macau casino operators jumped for a second straight session, with Melco International rising 7.3%, as the gambling hub aims to open to mainland Chinese tour groups in November for the first time in almost three years.

Meanwhile, Hong Kong scrapped its Covid-19 hotel quarantine policy for all arrivals and the Hang Seng Index rose 0.03%, or 5.17 points, to 17,860.31.

 

Philippines Shares Tumble

Elsewhere across the region, equities in Seoul were mostly flat, while Singapore’s benchmark index retreated 0.7%. But shares in the Philippines tumbled following the International Monetary Fund’s warning about the country’s economic growth.

Stocks in Taipei rose 0.4%, while Mumbai’s signature Nifty 50 index edged back 0.1%, or 16.20 points, at 17,000.10.

Globally, stocks picked up from 21-month lows and sterling rallied after hitting record lows versus the dollar a day earlier on UK plans for tax cuts, as market slides ran out of steam.

US S&P futures bounced 0.94% after Wall Street fell deeper into a bear market on Monday, benchmark 10-year Treasury yields dipped from the previous session’s 12-year high and the dollar eased from 20-year highs on a basket of currencies.

Markets remain nervous, however, after US Federal Reserve officials on Monday said their priority remained controlling domestic inflation.

Markets are pricing in a 76% probability of a further 75 basis point move at the next Federal Reserve meeting in November.

 

US Dollar Index Eases

The MSCI world equity index rose 0.29% after hitting its lowest since November 2020 on Monday. European stocks gained more than 1% and Britain’s FTSE rose 0.6%.

The spillover from Britain kept other assets on edge. Bond selling in Japan pushed yields up to the Bank of Japan’s ceiling and prompted more unscheduled buying from the central bank in response.

The dollar index eased 0.13% to 113.72, after touching 114.58 on Monday, its strongest since May 2002.

Oil rose more than 1% after plunging to nine-month lows a day earlier, amid indications that producer alliance OPEC+ may enact output cuts to avoid a further collapse in prices.

US crude gained 1.4% to $77.70 a barrel. Brent crude rose 1.3% to $85.20 per barrel.

Bitcoin broke above $20,000 for the first time in about a week, as cryptocurrencies bounced, along with other risk-sensitive assets.

 

Key figures

Tokyo – Nikkei 225 > UP 0.53% at 26,571.87 (close)

Hong Kong – Hang Seng Index > UP 0.03% at 17,860.31 (close)

Shanghai – Composite > UP 1.4% at 3,093.86 (close)

London – FTSE 100 > UP 0.18% at 7,033.25 (0935 BST)

New York – Dow < DOWN 1.11% at 29,260.81 (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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