Markets

Nikkei Lifted by Rates Hopes, Hang Seng Up Despite China Data

 

Asian stocks were back on the front foot on Thursday, poised to clock their strongest performance in 10 months, as hopes returned of an imminent end to the US Federal Reserve’s interest rates push.

But there was some investor impatience over the wait for significant stimulus announcements from Beijing as the world’s No2 economy continues to struggle.

Nevertheless, Japan’s Nikkei share average rose to book its best month in three years, as bets that US rates have peaked buoyed equities globally.

 

Also on AF: Work on New Coal Plants Raises Doubt on China’s Climate Vows

 

Japanese stocks also got a boost from a robust corporate earnings season earlier this month, as a weaker yen buoyed exporters and retailers successfully passed on higher costs to consumers.

The Nikkei ended the day up 0.50% at 33,486.89, extending the benchmark index’s gain for the month to 8.52%, the most since November 2020. The broader Topix added 0.44% on the day, for a monthly gain of 5.38%.

“Markets are now firmly embracing the idea that the Federal Reserve is done hiking, and its next move will be a cut,” said Tony Sycamore, an analyst at IG markets.

On Thursday, chip-testing equipment maker Advantest was both the Nikkei’s biggest percentage gainer and top points gainer, rallying 4.32%. 

China stocks closed ahead despite downbeat manufacturing data and investors calling for more easing measures. Hong Kong stocks rebounded after hitting a one-year low earlier.

China’s manufacturing activity contracted for a second straight month in November and at a quicker pace, an official factory survey showed on Thursday.

China’s blue-chip CSI300 Index edged up 0.23% and the Shanghai Composite Index rose 0.26%, or 7.99 points, to 3,029.67. The Shenzhen Composite Index on China’s second exchange fell 0.35%, or 6.64 points, to 1,883.21.

Tech giants traded in Hong Kong were down 0.3% but the Hang Seng Index gained 0.29%, or 49.44 points, to close at 17,042.88.

Elsewhere across the region, in earlier trade, Sydney, Seoul, Mumbai, Wellington, Jakarta and Taipei all rallied, though Singapore, Manila and Bangkok were in the red.

The MSCI Asia-ex-Japan stocks index was up 6.7% so far for this month, putting it on course to mark the best month since January.

 

Crude Prices Strengthen

Stock markets around the world struggled on Wednesday, after a strong month driven by market expectations of peak Federal Reserve rates, and as a fall in the dollar and in US bond yields loosened financial conditions.

Ten-year US yields are down more than 60 basis points in November, on track for the steepest monthly drop since late 2008.

While US central bank officials on Wednesday sent mixed messages, investors still focused on comments made on Tuesday by Fed Governor Christopher Waller, an influential and previously hawkish voice at the bank. Waller had said rate cuts could begin in months if inflation keeps easing.

Meanwhile, data from the US showed a strong economy in the third quarter and also a downtrend in inflation, reinforcing expectations the Fed might cut interest rates earlier than expected.

Oil prices rose more than $1 on Wednesday as investors looked past a jump in US crude, gasoline and distillate stock piles and focused on an upcoming meeting of OPEC+, the Organization of the Petroleum Exporting Countries and allies such as Russia.

Talks ahead of the meeting were focusing on additional cuts, although details have yet to be agreed, sources close to the group told Reuters.

US crude on Thursday dropped 0.33% to $77.6 per barrel and Brent was down 0.34% at $82.82.

Spot gold edged up 0.03% to reach $2,045.29 an ounce.

 

Key figures

Tokyo – Nikkei 225 > UP 0.50% at 33,486.89 (close)

Hong Kong – Hang Seng Index > UP 0.29% at 17,042.88 (close)

Shanghai – Composite > UP 0.26% at 3,029.67 (close)

London – FTSE 100 > UP 0.24% at 7,441.53 (0934 GMT)

New York – Dow > UP 0.04% at 35,430.42 (Wednesday close)

 

  • Reuters with additional editing by Sean O’Meara

 

Read more:

Chinese Manufacturing Contracts for a Second Month in a Row

China’s Debt-laden Provinces Raise $21bn to Save Small Banks

China ETFs Rake in Highest Ever Annual Inflows

Hang Seng Drops on Tech, Earnings; Banking Weighs on Nikkei

 

 

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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