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Asia Stocks Rally on US Fed Lift, Samsung Earnings Boost

Traders were in positive mood on Thursday with tech firms encouraged by Samsung’s results and receding fears of recession in the US


Investors across the region followed the lead of a positive Wall Street on Wednesday though fears over China’s property market are deepening.
A market index board is seen outside the Indonesia Stock Exchange in Jakarta. Photo: Reuters.

 

Asian stocks rallied on Thursday as bargain-hunters swooped and investors were buoyed by positive data from both the US and China.

Tech stocks led the advances lifted by overnight Wall Street gains after new Fed minutes soothed recession fears. Beijing also moved to support its auto industry, boosting confidence in a recovery for the world’s No-2 economy.

Japanese shares closed higher as investors continued to hunt for beaten-down technology stocks. The Nikkei share average rose 1.47% to close at 26,490.53 and the broader Topix climbed 1.42% to 1,882.33.

 

Also on AF: China Stock Market Booms in June as Foreigners Exit Bonds

 

“There was no additional shock from the Fed’s minutes,” said Shogo Maekawa, global market strategist at JP Morgan Asset Management. “Recent positive US economic data also erased concerns about economic uncertainties.”

Chip-making equipment maker Tokyo Electron rose 1.9% and was the biggest boost for the Nikkei, followed by robot maker Fanuc, which advanced 3.75%. Air-conditioning maker Daikin Industries climbed 2.81%.

China stocks ended higher, as automakers jumped on fresh measures rolled out to spur car sales, while data showing foreign inflows also softened concerns over new Covid-19 flare-ups.

The bluechip index CSI300 gained 0.4%, while the Shanghai Composite Index rose 0.27%, or 9.05 points, to 3,364.40. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 1% from a two-month low.

An index tracking automakers surged 4.7% after Beijing said it would consider extending a tax break for electric vehicles and outlining plans to build more charging stations and encourage lower charging fees.

New energy vehicle stocks jumped, with electric car maker BYD gaining 4%.

Market sentiment was also lifted by the Institute of International Finance data showing $9.1 billion of foreign inflows into China’s stock market in June, bucking the trend in other emerging markets.

The Hang Seng Index was up 0.26%, or 56.92 points, to 21,643.58. while the Shenzhen Composite Index on China’s second exchange gained 0.93%, or 20.47 points, to 2,227.66.

 

Samsung Lifts Tech Mood

Elsewhere across the region, shares in South Korea rose more than 2%, rebounding from a 20-month low hit in the previous session, with Samsung among the biggest movers after posting its best second-quarter profit in four years.

Equities in Jakarta edged up to 0.6% and Indian stocks rose with Mumbai’s signature Nifty 50 index up 0.66%, or 105.45 points, at 16,095.25.

Globally, chipmakers rode the Samsung wave helping to soothe investor worries over a potentially rapid recession because of looming rate hikes, while the euro struggled near a 20-year parity with the safe-haven dollar.

Sterling rose 0.6% after reports that Britain’s Prime Minister Boris Johnson will resign following a string of ministerial resignations, after plumbing two-year lows on Wednesday amid political uncertainties. The FTSE blue chip index in London gained 0.9%.

Crude oil fluctuated on either side of $100 a barrel as tight supplies and worries over demand jostled for market attention.

The MSCI global share index was up 0.4%, having lost about a fifth of its value so far this year.

 

Europe Recession Fears

Kevin Thozet, investment committee member at Carmignac asset management, said US economic data was pointing towards slower economic growth, though not imminent recession.

“Markets are potentially exaggerating recession risk or recession coming very rapidly,” Thozet said, adding that investors were pivoting towards utility-style companies like pharmaceuticals, which are less sensitive to downturns.

“We are collectively buying what we need more than what we want,” Thozet said.

Elsewhere in Europe, the euro sought to claw back from its near two-decade trough against the greenback.

“It’s not just a question of recession, it’s a question of how dark it gets in Europe,” said Chris Weston, head of research at brokerage Pepperstone in Melbourne.

Benchmark US 10-year yields were last at 2.942%, up slightly on the day after having fallen from a more than 11-year high of 3.498% on June 14.

 

Key figures

Tokyo – Nikkei 225 > UP 1.47%  at 26,490.53 (close)

Hong Kong – Hang Seng Index > UP 0.26% at 21,643.58 (close)

Shanghai – Composite > UP 0.27% at 3,364.40 (close)

New York – Dow > UP 0.23% at 31,037.68 (Wednesday close)

 

  • Reuters with additional editing by Sean O’Meara

 

Read More:

Samsung Shares Rise 3% After Upbeat Quarterly Earnings

China Looking to Extend EV and Car Tax Exemptions

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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