Asian markets saw a surge in stock prices driven by the positive momentum on Wall Street and a rebound in Chinese technology shares. Investors are speculating on a potential interest rate cut by the Federal Reserve as early as March, contributing to the buoyant market sentiment.
The MSCI Asia Pacific Index experienced a robust increase of up to 0.9%, poised to achieve its highest close in over four months. Australia’s S&P/ASX 200 index reached its highest intraday level since April 2022, propelled by gains in mining stocks amid a surge in iron ore prices. This notable market activity occurred after a long weekend.
Hong Kong stocks joined the uptrend following the holiday break, with Chinese tech firms leading the gains. This positive movement came after Beijing adopted a more lenient stance on the gaming industry, easing concerns that had triggered a stock selloff. Equities in Shanghai and Shenzhen rebounded from earlier losses, thanks to accelerated growth in the country’s industrial profits.
US futures showed minimal changes after the S&P 500 closed within 0.5% of its record high. The recent month has seen a 4.5% increase in US stocks, bringing the year-to-date gain to 24%. The dollar remained stable against major currencies, while 10-year Treasury yields dipped 2 basis points in Asia trading.
Analysts anticipate a continuation of the recent positive trend in Asia, with US markets likely to rally throughout the remainder of the week. However, China and Hong Kong may lag, and any rally in Hong Kong could be short-lived, according to Redmond Wong, a strategist at Saxo Capital Markets in Hong Kong.
Japan’s Nikkei 225 index recorded a gain of over 1%, approaching a closing level near its 34-year high. This move followed discussions among Bank of Japan board members regarding the potential timing of ending the negative rate policy. The yen slightly weakened, and Japanese government bond yields fell after the release of the summary.
In Hong Kong, major tech stocks showed signs of recovery from a significant selloff, with Tencent climbing up to 4.9% and NetEase surging more than 14%.
While US and Australian indexes approach record highs, and Indian gauges maintain near all-time peaks, the MSCI’s all-country index is 4.5% below its November 2021 record. The Asia-Pacific region, represented by the MSCI Asia-Pacific Index, still lags, sitting 25% below its February 2021 high.
In other markets, oil prices reversed gains after escalating tensions in the Middle East, and gold remained relatively unchanged. Bitcoin experienced a minor retreat as traders assessed the potential impact of regulators approving the first US exchange-traded funds directly investing in the cryptocurrency.
In corporate news, SoftBank Group witnessed its most significant intraday gain since June 13 after announcing it would receive $7.6 billion worth of T-Mobile US shares at no additional cost.
