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(Bloomberg) — Asian equities advanced for a second session following Monday’s global rout, after the Bank of Japan said it won’t raise interest rates if financial markets are unstable.
The MSCI Asia Pacific Index climbed as much as 1.8%. Japan’s Topix index pared earlier gains to close 2.3% higher as the BOJ Deputy Governor Shinichi Uchida noted the recent volatility in the nation’s markets and said its rate path will shift if there’s an impact on the policy outlook. Benchmarks in South Korea and Taiwan also climbed, with the Taiex index logging its biggest single-day rally since May 2021.
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Technology stocks led gains across the region as concerns about further unwinding of the yen carry trade eased, with the Japanese currency weakening more than 2% against the dollar. Still, some market watchers remained cautious.
Deputy Governor Uchida’s comments “can bring some stability to the Japanese equity market for now, but it can’t take the focus away from US recession concerns,” said Charu Chanana, head of currency strategy at Saxo Markets. “Putting in fresh carry trades remains tough in this environment of higher volatility and nervousness about the US economy.”
Equities tumbled globally on Monday after a weak US jobs report fueled worries that the Federal Reserve’s interest rate policy was risking a deeper economic slowdown, while higher borrowing costs from the BOJ spurred an reversing of carry trades after the yen rallied. Investors will be closely watching US initial jobless claims, scheduled for release on Aug. 8 in Asian hours.
Sectors to Watch
- Realty stocks in India advance as the federal government seeks to alter recently proposed tax rules to provide relief for the sector.
- Boryung shares lead a rise in South Korean biotech and pharma firms as Hana Securities expects a better earnings outlook in the second half of the year.
- Shares related to China’s electricity grid tech advance as the nation plans to build a new power system to increase the supply of electricity generated through renewable energy.
- Chinese computing stocks gain as the nation vows to better coordinate the planning of computing and electric power infrastructure construction.
- Chinese satellite navigation stocks rise after the government asks SOEs in the navigation and other sectors to buy more domestic products.
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Markets at a Glance
- MSCI Asia Pacific Index rises 1.4%
- Japan’s Topix Index rose 2.3%; Japan’s Nikkei Index rose 1.2%
- China’s CSI 300 Index gains 0.2%; Hong Kong’s Hang Seng Index gains 1.6%; Hong Kong’s Hang Seng China Enterprises Index rises 1.6%
- Taiwan’s Taiex Index rose 3.9%
- South Korea’s Kospi Index rose 1.7%; South Korea’s Kospi 200 Index rose 2%
- Australia’s S&P/ASX 200 Index rose 0.4%; New Zealand’s S&P/NZX 50 Gross Index rose 0.7%
- India’s NSE Nifty 50 Index gains 1%
- Singapore’s Straits Times Index rises 1.9%; Malaysia’s KLCI Index climbs 1.2%; Philippines’s PSEi Index rises 0.6%; Indonesia’s JCI Index advances 1.2%; Thailand’s SET Index rises 1.5%; Vietnam’s VN Index falls 0.3%
- 10-year Treasury yield rises 1.5 basis points
- Bloomberg Dollar Index gains 0.2%
- West Texas Intermediate crude climbs 0.2% to $73 a barrel
- Euro falls 0.2%
Here Are the Most Notable Movers
- Fuyao Glass share gain as much as 5.1% in Hong Kong, the most since April 26, after the automobile glassmaker reported net income for the first half-year rise 23% y/y.
- New Oriental Education stock jumps as much as 14% in Hong Kong, before paring gains to 1.7%, after a plan to issue a special dividend on its US-listed shares.
- Daikin shares plunge as much as 15% to the lowest since June 2020, after the Japanese air conditioning equipment maker reported first-quarter operating income that missed the average analyst estimate.
- SoftBank Corp. climbs as much as 5% after the Japanese telecomms company reported operating income for the first quarter that beat the average analyst estimate.
- Mitsubishi Heavy shares rise as much as 2.9% after posting stronger-than-expected 1Q business profit despite the seasonality of sales bookings.
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Related Market News
- Taking Stock: The outsized drop in bank shares during the recent rout in Japanese stocks has the potential to bring an off-the-scale recovery.
- Global Wrap: Global shares rose and the yen fell after the Bank of Japan’s deputy governor said it won’t raise interest rates if markets are unstable, supporting a recovery after the recent global meltdown.
- Inside Asia: The Malaysian ringgit leads declines in most emerging Asian currencies on Wednesday, as the dollar strengthens with traders paring back interest-rate easing expectations in the US.
Notes From the Sell-Side
- Goldman Sachs recommends turning “moderately defensive” in Asia Pacific allocations, upgrading Malaysia stocks to market-weight and downgrading Singapore to underweight.
OPTIONS
- CSPC Pharma, MTR, Techtronic, Trip.com in Focus: HK Options
- Mirvac Group, Northern Star in Focus: Australia Options
- NTPC, Polycab India, Maruti Suzuki: India Options Wrap
- LG Innotek, LG Uplus, Posco Holdings: South Korea Options Wrap
This story was produced with the assistance of Bloomberg Automation.
(Updates with latest index levels)
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