Asia report: Most markets rise ahead of regional rate decisions

7th Oct 2024 09:09

(Sharecast News) - Asian markets mostly advanced on Monday, with Japan leading gains as investors anticipated key central bank decisions later in the week.

Investors were looking to potential rate cuts from the Bank of Korea and the Reserve Bank of New Zealand, while expectations were that the Reserve Bank of India would hold its current rate.

"From concerns about a US economic 'hard landing', the discussion has shifted to the potential for a so-called 'no landing', where the labour market remains robust even as inflation eases," said TickMill's Patrick Munnelly.

"The narrative is so compelling that it has completely absorbed the attention of traders and investors, even as Israeli bombs fell in Gaza and Lebanon, with Monday marking one year since the Hamas attack that triggered war.

"Asian stocks picked up where Wall Street had left off, and Japan's Nikkei led the charge, receiving additional support from a significantly weaker yen."

Munnelly noted that the "US exceptionalism narrative", which he said had been on shaky ground in September, was standing tall, with the mighty dollar straddling its shoulders.

"The upcoming week in financial markets will be shaped by inflation data from the world's two largest economies, the Reserve Bank of New Zealand's rate decision, speeches by Federal Reserve officials, Middle East tensions, and expectations of further Chinese stimulus measures."

Most markets rise on last day of China's break

In Japan, the Nikkei 225 climbed to 39,332.74 points, while the broader Topix index added 1.68%.

Shares in major Japanese companies saw significant gains, with Resona Holdings up 8.68%, Konami rising 8.15%, and Nikon increasing by 7.91%.

Nintendo shares rallied 4.44% after reports suggested that Saudi Arabia's Public Investment Fund (PIF) was looking to raise its stake in the gaming giant and other Japanese gaming firms such as Koei Tecmo and Nexon.

China remained out of action due to the Golden Week holiday, with trading on the mainland set to resume on Tuesday.

Hong Kong's Hang Seng Index rose by 1.6%, reaching 23,099.78 points, with tech and insurance stocks driving the gains.

Semiconductor Manufacturing International Corporation (SMIC) soared 19.38%, while Citic Pacific added 12.88%, and China Life Insurance jumped 12.42%.

South Korea's Kospi 100 gained 1.59% to close at 2,614.41 points as SK IE Technology surged 11.89%, and LF Co increased by 11.07%.

Kumyang also recorded strong gains, advancing 10.74%.

In Australia, the S&P/ASX 200 index rose 0.68% to 8,205.40 points, supported by a rally in lithium stocks.

Arcadium Lithium shares soared 45.69% after Rio Tinto expressed interest in acquiring the company, while Liontown Resources rose 18.92%.

However, New Zealand's S&P/NZX 50 bucked the regional trend, slipping 0.18% to 12,596.87.

Scales Corporation led the losses, falling 6.96%, followed by Fisher & Paykel Healthcare, which declined 3.7%.

In currency markets, the dollar was last down 0.28% on the yen, trading at JPY 148.29.

The greenback was meanwhile stronger against its antipodean counterparts, rising 0.12% on the Aussie to AUD 1.4733, and advancing 0.25% against the Kiwi, changing hands at NZD 1.6276.

Oil prices were higher, with Brent crude futures last up 1.41% on ICE at $79.15 per barrel, and the NYMEX quote for West Texas Intermediate rising 1.69% to $75.64, as supply concerns continued to support prices.

Central bank decisions in focus this week

Economic attention in the Asia-Pacific region was focussed on upcoming interest rate decisions from three key central banks.

The Bank of Korea, Reserve Bank of New Zealand and Reserve Bank of India were all set to announce their monetary policy updates this week.

Economists anticipated that the Bank of Korea would lower its benchmark rate to 3.25% from 3.5% on Friday, while central bankers in New Zealand were expected to deliver a 50-basis-point cut on Wednesday, reducing its rate to 4.75%.

That would follow an unexpected rate cut by the RBNZ in August, when it reduced its policy rate to 5.25%.

In contrast, the Reserve Bank of India was expected to maintain its current rate.

Regional markets were also digesting Friday's US economic data, which showed stronger-than-expected job growth.

The nonfarm payrolls report for September revealed an increase of 254,000 jobs, far exceeding the forecast of 150,000.

America's unemployment rate meanwhile slightly decreased to 4.1%, contrary to expectations that it would hold steady at 4.2%.

Reporting by Josh White for Sharecast.com.