Asian Shares Surge on Positive U.S. and China Economic Data
Asian shares have rallied sharply after encouraging economic data from the United States and China.
On Wednesday, Asian stock markets experienced significant gains, primarily driven by indications of easing U.S. inflation, which has intensified speculation about a potential pause in interest rate hikes, along with robust economic indicators from China, including strong industrial output and retail sales figures. The dollar index declined and treasury yields fell, boosting bullion prices, even as oil prices rose slightly amid stability.
China's economic data was a focal point, with the Shanghai Composite Index climbing 0.55% to 3,072.83. The Hang Seng Index in Hong Kong surged 3.92% to 18,079, surpassing its 50-day moving average, propelled by strong performances in major technology stocks like Tencent Holdings, which rallied 4.8% ahead of its earnings release. Meanwhile, the figures reported earlier confirmed that Chinese industrial production and retail sales exceeded expectations in October, although there was a noted slowdown in fixed asset investment and continuing declines in property sales.
In Japan, despite disappointing economic data indicating a contraction of 0.5% in Q3 GDP linked to the prior quarter, the Nikkei Average rose sharply by 2.52% to 33,519.70, marking a close above the psychological 33,000 level for the first time in nearly two months. This rebound signals a growing expectation for government and Bank of Japan support in response to the recent GDP data. The broader Topix index also gained 1.19% to close at 2,373.22, with semiconductor stocks leading the rally, including Tokyo Electron, Screen Holdings, and Advantest, which gained between 4% and 7%. Notable shares such as Idemitsu Kosan increased by 18.3% after the refiner raised its profit forecast and announced a share split, whereas Toshiba's shares ended flat despite reporting a hefty net loss.
Seoul's Kospi index rose 2.20% to 2,486.67, buoyed by hopes surrounding a potential end to U.S. interest rate hikes as key battery makers, tech, and automotive shares saw upward momentum, with giants like Samsung Electronics, LG Energy Solution, and Hyundai Motor rising between 2% and 4%.
In Australia, the benchmark S&P/ASX 200 index advanced 1.42% to 7,105.90, achieving its highest close since September 20, notwithstanding the turbulence associated with accelerating wages — the highest growth in over 14 years. Likewise, the All Ordinaries index climbed 1.52% higher to 7,316.70. In New Zealand, the benchmark S&P/NZX 50 index increased 1.61% to close at 11,352.84, reflecting its highest level since late September.
Investor sentiment was amplified by developments in U.S. markets overnight, where stocks extended their gains on softer inflation data that fueled speculation that the Federal Reserve may curtail rate hikes. The annual consumer price growth in October moderated to 3.2% from 3.7% in September, below economists' expectations of 3.3%. This eased market tensions and allowed the tech-heavy Nasdaq Composite to jump 2.4%, reaching a three-month peak, while both the Dow and S&P 500 indices set new two-month closing highs.
The cooling inflation rates are fostering a constructive outlook among investors as they anticipate potential policy pivots. Risk markets are cautiously optimistic, with significant movements hinging on forthcoming events, including the highly anticipated meeting between Chinese President Xi Jinping and U.S. President Joe Biden. However, analysts caution that expectations remain muted due to persistent disagreements over critical issues like Taiwan, the South China Sea, the Israel-Hamas conflict, and the ongoing impact of Russia's invasion of Ukraine on global security and economic stability.
In conclusion, the convergence of positive economic data from both the U.S. and China has triggered a rally in Asian shares, reflecting hopes for sustained economic recovery amidst inflation dynamics. The forthcoming dialogue between key global leaders may further influence market trends as global investors remain watchful of macroeconomic signals and geopolitical hurdles that could shape financial landscapes in the near future.
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