Asia report: Most markets rise as global rebound continues

7th Aug 2024 10:12

(Sharecast News) - Asia-Pacific markets extended their rally on Wednesday, buoyed by Wall Street's recovery after a three-day losing streak.

Investors in the region digested mixed economic signals from China, where July trade data showed a better-than-expected increase in imports but a shortfall in exports.

"After Wall Street's generally positive cues overnight, Asian stock markets are basically up on Wednesday," said TickMill market analyst Patrick Munnelly.

"Traders are buying equities at a discount following the recent sharp sell-off that was sparked by concerns that the largest economy in the world will enter a recession.

"The Bank of Japan appears to have taken on the role of the infamous 'Plunge Protection Team' from the Federal Reserve, as Nikkei investors hope."

Munnelly noted that after an early 3% decline, the Nikkei rebounded and nearly returned to its pre-Monday 13% crash level.

"Bank of Japan deputy governor Shinichi Uchida's statement that the central bank would not raise interest rates amid market volatility saved the day and perhaps the fate of the yen carry trade.

"The dollar surged 2% against the yen, Japanese yields fell, and the probability of a BoJ rate hike in October dropped to just one-in-four, a marked change from last week when the bank hiked rates by 15 basis points and signalled further tightening, leading to a surge in the yen and the unravelling of the yen carry trade.

"As a result, the yen saw a spike in value and the collapse of the yen carry trade, in which investors borrowed money at cheap interest rates to purchase assets with greater yields."

Most bourses finish session in the green

Japan led the regional gains, with the Nikkei 225 climbing 1.19% to 35,089.62, and the Topix surging 2.26% to 2,489.21.

Notable performers on Tokyo's benchmark included Japan Steel Works, which jumped 11.63%, and Sumitomo Mitsui Financial, up 10.24%, reflecting robust investor sentiment.

In China, the Shanghai Composite edged up 0.09% to 2,869.83, while the Shenzhen Component dipped 0.17% to 8,449.58.

Despite the mixed index performance, individual stocks like Shanghai Huili Building Materials and Shanghai Lingyun Industries Development soared over 10%.

Hong Kong's Hang Seng Index advanced 1.38% to 16,877.86, driven by gains in China Hongqiao, up 4.96%, and Trip.com Group, ahead 4.87%, as the market responded positively to the broader regional uptrend.

In South Korea, the Kospi rose 1.83% to 2,568.41, with KakaoBank and Korea Zinc each posting gains of over 8%, signalling strong performance in the financial and materials sectors.

Australia's S&P/ASX 200 saw a modest increase of 0.25% to 7,699.80.

Lithium stocks were in focus, with Arcadium Lithium climbing 7.48% and Pilbara Minerals up 6.43%.

New Zealand's S&P/NZX 50 added 0.66% to close at 12,326.17, supported by Vista Group International, which rose 5.42%, and Kiwi Property Group, which finished 4.73% higher.

In currency markets, the dollar was last up 2.11% on the yen, trading at JPY 147.39.

The greenback was weaker against its antipodean counterparts, however, falling 0.57% on the Aussie to AUD 1.5250, and retreating 1.01% from the Kiwi to change hands at NZD 1.6628.

Oil prices saw slight gains, with Brent crude futures last up 0.29% on ICE at $76.70 per barrel, and the NYMEX quote for West Texas Intermediate ahead 0.31% at $73.43.

China trade data for July comes in mixed

In economic news, China reported mixed trade data for July, revealing that imports grew faster than expected while export growth lagged behind forecasts.

According to customs data released earlier, exports in US dollar terms increased 7% compared to the same month last year.

However, that growth fell short of economists' expectations of a 9.7% rise and was slower than June's 8.6% increase.

In contrast, imports surged by 7.2%, significantly exceeding the anticipated 3.5% growth, after a surprising 2.3% decline in June due to weak domestic demand.

In Japan, Bank of Japan deputy governor Uchida Shinichi emphasised the importance of maintaining the current monetary easing policy amid volatile financial and capital markets both domestically and internationally.

His remarks underscored the bank's cautious approach to adjusting interest rates in the face of economic uncertainty.

Elsewhere, Japan's Ministry of Finance revealed that it had conducted a record-breaking yen-buying intervention on 29 April, spending JPY 5.92trn in a single day to stabilise the falling yen.

The ministry also disclosed that an additional JPY 3.87trn worth of dollars was sold on 1 May as part of its continued efforts to support the currency.

Reporting by Josh White for Sharecast.com.