Asia report: Markets follow Wall Street higher

10th May 2024 09:58

(Sharecast News) - Hong Kong spearheaded a jump in Asia-Pacific stocks on Friday, riding the coattails of positive momentum from Wall Street.

Renewed optimism for rate cuts by the US Federal Reserve overnight helped to buoy global market sentiment.

"Asia-Pacific equity markets showed overall optimism following a positive session in the US," said TickMill market analyst Patrick Munnelly, noting that the MSCI Asia-Pacific Index rose 0.7%, with Hong Kong's benchmark reaching its highest level since September, while shares in Japan, South Korea, and Australia also advanced.

"US futures slightly increased as the S&P 500 index finished less than 1% below its all-time high on Thursday.

"The Hang Seng rose after authorities considered excluding private investors from paying taxes on income earned from Hong Kong equities purchased through Stock Connect."

Munnelly said onshore Chinese equities dipped as investors reviewed a story claiming that the US president Joe Biden's administration was set to announce a broad decision on China tariffs as early as next week.

"Unexpectedly strong US weekly initial jobless claims, reaching their highest level since August, added to expectations of potential easing in Fed policy later this year.

"Concurrently, the Bank of England hinted at the possibility of an interest rate cut next month, although it's not assured and depends on forthcoming data."

Regional markets a sea of green

In Japan, the Nikkei 225 rose 0.41% to reach 38,229.11, while the broader Topix index climbed by 0.54% to settle at 2,728.21.

Leading the gainers on Tokyo's benchmark was Konami, up 9.27%, followed by Mercari with a 9.1% increase, and Sumco, which surged by 8.36%.

Mainland China saw mixed fortunes, with the Shanghai Composite inching up by 0.01% to close at 3,154.55, while the Shenzhen Component dipped by 0.58% to reach 9,731.24.

Notable performers in Shanghai included AA Industrial Belting Shanghai, soaring by 10.02%, and Ecovacs Robotics, which surged by 10%.

Hong Kong's Hang Seng Index posted a robust 2.3% gain, reaching 18,963.68.

Key contributors to the surge in the special administrative region included Hong Kong Exchange and Clearing, which rose by 7.61%, China Resources Land with a 7.18% increase, and China Construction Bank, up by 6.82%.

South Korea's Kospi index climbed by 0.57% to settle at 2,727.63, propelled by NCsoft, which jumped 10.57%, and Mirae Asset Daewoo Securities, up by 7.28%.

In Australia, the S&P/ASX 200 edged up by 0.35% to reach 7,749.00, with Beach Energy leading the gains at 4%, followed by Boss Energy with a 3.96% increase.

New Zealand's S&P/NZX 50 index saw a modest gain of 0.07% to close at 11,755.17, with SkyCity Entertainment Group rising by 3.57% and Vista Group International up by 3.39%.

In currency markets, the dollar was last 0.15% stronger on the yen, trading at JPY 155.72, while it gained 0.11% against the Aussie to AUD 1.5123, and advanced 0.24% on the Kiwi to last change hands at NZD 1.6611.

On the oil front, Brent crude futures were last up 0.42% on ICE at $84.23 per barrel, while the NYMEX quote for West Texas Intermediate added 0.56% to $79.70.

Japan current account surplus jumps, household spending mixed

In economic news, Japan posted its largest current account surplus in the financial year ended March, reaching JPY 25.3trn, according to Reuters.

The surplus for March alone stood at JPY 3.4trn, signalling ongoing strength in Japan's trade balance.

In a separate report, Japan's household spending in March showed a mixed picture.

While it declined by 1.2% in real terms compared to the same period last year, that was less severe than the 2.4% drop predicted by economists surveyed by Reuters.

On a month-on-month basis, household spending actually grew by 1.2%, surpassing expectations of a 0.3% decrease according to Reuters polling.

The country's statistics bureau revealed that average monthly consumption spending reached JPY 318,713, marking a 1.9% increase in nominal terms.

However, average monthly household income stood at JPY 513,734 for March, reflecting a 3% rise in nominal terms but a marginal 0.1% decrease in real terms compared to the prior year.

Reporting by Josh White for Sharecast.com.