Asian markets edged ahead in limited trade on Tuesday following another strong lead from Wall Street fuelled by a rebound in tech firms.
Traders were also lifted by comments from Federal Reserve officials which eased concerns that it will embark on an aggressive phase of policy tightening.
US equities rallied for a second day with plenty of support coming from Apple’s blowout earnings report last week, while the current reporting season has proved fruitful despite concerns about inflation and central banks withdrawing financial support.
The Wall Street surge came at the end of a volatile month characterised by speculation over the Fed’s plans to get a grip on runaway prices, with fears that its new hawkish tilt could see it hike borrowing costs as much as seven times this year with a 50 basis point move in March.
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Comments from some leading figures at the bank at the weekend added to expectations the policy board would go hard and fast, though some were out on Monday trying to play down such a move.
Atlanta Fed boss Raphael Bostic said he was not in favour of such a big hike next month, having told the Financial Times at the weekend that his colleagues had not ruled it out.
Meanwhile, Kansas City Fed President Esther George said it was in “no one’s interest to try to upset the economy with unexpected adjustments,” and the head of the San Francisco arm, Mary Daly, added that measures “have to be gradual and not disruptive.”
The Nasdaq soared more than 3%, paring losses for January to 9%, having at one point been down almost 15% during the month, while The S&P 500 and Dow also chalked up healthy gains.
And the positive energy continued in Asia, with Tokyo, Wellington, Mumbai and Bangkok all up.
The benchmark Nikkei 225 index added 0.28% or 76.50 points to end at 27,078.48, while the broader Topix index was flat, inching up 0.01% or 0.13 points to 1,896.06.
Sydney also ended in positive territory as the Australian central bank decided against hiking interest rates to battle inflation, instead just announcing the end to its bond-buying stimulus from next week.
Chinese New Year Break
However, business was thin across the region owing to the Chinese New Year break that saw Hong Kong, Shanghai, Singapore, Seoul, Taipei, Manila and Jakarta closed.
There was also hope that the rally could indicate markets are finding a bottom after the recent sell-off.
“The back-to-back consecutive rise in US stocks has got some thinking whether the trough has passed,” National Australia Bank’s Tapas Strickland said.
“Despite the talk of higher rates, earnings so far have been much better than expected. Whether we have passed the trough is uncertain, but certainly for some value is re-emerging.”
Traders are now awaiting policy decisions by the Bank of England and European Central Bank this week, while US jobs creation data due on Friday could provide a fresh look at the world’s top economy in light of inflation and rate hike expectations.
Oil prices extended their recent rally on demand optimism and the Russia-Ukraine standoff that is fanning worries over a possible hit to supplies. OPEC and other major producers’ decision not to boost output by more than current levels was also a factor, analysts added.
Key figures around 0620 GMT
Tokyo > Nikkei 225: UP 0.3% at 27,078.48 (close)
Hong Kong > Hang Seng Index: Closed for a holiday
Shanghai > Composite: Closed for a holiday
New York > Dow: UP 1.2% at 35,131.86 (Monday close)
London > FTSE 100: FLAT at 7,464.37 (Monday close)
- AFP with additional editing by Sean O’Meara
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