Stocks rose on almost all Asian markets on Thursday on the back of Wall Street’s enthusiasm over strong results from tech favourite Nvidia.
Japan’s Nikkei stock index rose 0.87%, in a fourth straight session of gains, the longest streak since mid-June, while Australian shares edged up 0.45%.
China stocks also rebounded with Hong Kong’s Hang Seng index climbing 2.05%, and the Shanghai blue-chip CSI300 index advancing 1.3% in early trade, before the early gains were erased near the close of trading and it ended just 0.12% up after recent dips.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.5% but is still on course to clock its worst monthly performance since February, down nearly 8% so far this month due to the weakness in China’s economy and yuan, as well as some gloomy factory readings from Japan, which also left sentiment fragile.
However, MSCI Asia ex-Japan’s IT Index shot up by 2.5% – its best day in over two months.
Yuan edges up
The yuan inched higher against the dollar, as the central bank continued to fix the daily mid-point at stronger-than-expected levels.
“With the Chinese currency edging higher today, foreign capital has flowed back into and helped stabilise China’s stock markets,” Zhang Zihua, chief investment officer at Beijing Yunyi Asset Management. “A rally in the broader Asian markets following Nvidia’s forecast has also lifted sentiment.”
Foreign investors bought a net 2.9 billion yuan ($398.78 million) of Chinese shares so far in the day, snapping a 13-day selling streak.
US bond yields down
Investors were also encouraged a drop in US bond yields, which eased pressure on global borrowing costs, and a round of soft manufacturing surveys that boosted hope central banks are likely to end their tightening.
A clearer picture is expected to emerge on Friday, when Federal Reserve chairman Jerome Powell gives at an annual central bank summit in Jackson Hole, Wyoming.
“Equities rallied and bond yields retreated as flash PMI data for August signalled weaker economic activity in the US, euro area and UK, fuelling market expectations that central banks may not have to raise rates again,” said analysts at ANZ in a note.
“This week’s Jackson Hole Symposium remains firmly in focus for markets … We expect (Powell) will err on the side of caution with respect to inflation, noting some signs of improvement but still with a long way to go.”
European markets were set for a higher open, with pan-region Euro Stoxx 50 futures up 1.7%, German DAX futures rising 0.6% and FTSE futures adding 0.5%.
US stock futures, the S&P 500 e-minis, rose 0.77%.
Wall Street lifted by Nvidia’s big jump
On Wednesday, US stocks ended sharply higher across the board as shares of Nvidia jumped nearly 10% in trading after the bell, hitting an all-time high after it forecast third-quarter revenue well above Wall Street targets.
On Wall Street, the Dow Jones Industrial Average rose 0.54%, the S&P 500 gained 1.1% and the Nasdaq Composite added 1.6%.
In US Treasuries, the yield on benchmark 10-year Treasury notes reached 4.2076% compared with its US close of 4.198% on Wednesday when it eased from near 16-year highs after weak business activity data from the United States and the euro zone.
The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 4.9885% compared with a US close of 4.952%.
In currency markets, the dollar index stayed flat at 103.35 in afternoon Asia trade after hitting a two-month high of 103.4 against a basket of major currencies.
The yen recovered to 145.165 after hitting a nine-month trough of 145.34 amid talk from a former Bank of Japan official that Japan will only intervene in the market if the currency plunges past 150 to the dollar.
US crude dipped 0.06% to $78.84 a barrel. Brent crude fell to $83.2 per barrel.
Gold was slightly higher. Spot gold was traded at $1,919.5 per ounce.
- Reuters with additional editing by Jim Pollard