Markets in Asia climbed on Thursday, after the best performance by the US in nearly a decade
Japanese shares surged nearly four percent on Thursday, with investors heartened by Wall Street’s best performance in nine years after the White House said Fed Chair Jay Powell would not be fired.
Asian markets followed Tokyo’s lead with most showing gains, giving some welcome relief from a lingering global market downturn.
Singapore was up 1.4 percent in afternoon trade, Taiwan gained 1.7 percent and Bangkok rose 0.8 percent. Sydney closed up 1.9 percent.
Chinese markets slid after the release of weak economic data, showing that profits in the industrial sector declined 1.8 percent in November. Hong Kong closed down 0.7 percent while Shanghai closed down 0.6 percent.
“Thankfully for investors, the relentless selling on the back of risk-off sentiment which prevailed leading up to Christmas has mercifully halted… with the Dow surging over 1,000 points while adding the most significant points gain in history,” said Stephen Innes, head of APAC trading at OANDA.
Wall Street stocks roared back to life in post-Christmas trade on Wednesday, shaking off four straight routs following strong retail sales data and White House reassurances that Powell would not be fired.
Sentiment also improved after a Bloomberg News report said a US government delegation would travel to Beijing in early January to hold trade talks, the first face-to-face discussion since US President Donald Trump and Chinese President Xi Jinping agreed on a 90-day trade war truce.
The Dow Jones Industrial Average finished up nearly 1,100 points, or about five percent, with the broad-based S&P 500 also surging five percent.
“It was possible that risk appetite wouldn’t recover until after the new year but thanks to the upturns in Tokyo and New York, we are likely to see the new year in with a somewhat brighter mood,” Mizuho Securities said in a note.
– Underlying caution –
Many global investors have been unnerved by a variety of factors, including the partial US government shutdown, the US-China trade war and Trump’s ongoing criticism of Fed Chair Powell.
But while a sense of relief won out for now, analysts warned that there was still much uncertainty in the market.
“Don’t get too comfortable as discussions regarding the various political and policy questions remain hanging in the balance,” said Innes.
US stock-index futures fell as much as 0.7 percent on Thursday, suggesting investors are unlikely to sustain Wednesday’s rally when US markets open.
Kyle Rodda, a Melbourne-based market analyst at IG Group Holdings Plc, told Bloomberg News investors “are still nervous about how financial markets and the global economy will go during a cyclical slowdown without central bank support”.
The euro remained weak against the dollar after falling in New York.
Mizuho Bank said: “Many market players expect the dollar would likely drop against the yen early next year as factors that could fuel risk aversion or prompt dollar selling are lining up.”
They include risks of a no-deal Brexit, the February 28 deadline for the Trump administration in trade talks with China and chances that the Federal Reserve would pass on a rate hike expected in March, it said.
Meanwhile, oil markets lost some of their gains as crude prices slid Thursday, after jumping nearly nine percent Wednesday to mark the biggest gain in more than two years.
Gold has also been soaring and was set for its biggest monthly gain in almost two years, with investors seeking safe havens amid the partial US government shutdown and concerns about the global political and economic outlook.
In early European trading on Thursday, London and Paris opened up 0.4 and 1.4 percent respectively, while Frankfurt fell nearly 0.3 percent after the holiday break.
– Key figures around 0830 GMT –
Tokyo – Nikkei 225: UP 3.9 percent at 20,077.62 (close)
Hong Kong – Hang Seng: DOWN 0.7 percent at 25,478.88 (close)
Shanghai – Composite: DOWN 0.6 percent at 2,483.09 (close)
Euro/dollar: DOWN at $1.1391 from $1.1392 at 2200 GMT Tuesday
Dollar/yen: UP at 110.91 from 110.31
Pound/dollar: DOWN at $1.266 from $1.267
Oil – Brent Crude: DOWN 65 cents at $53.80 per barrel
Oil – West Texas Intermediate: DOWN 53 cents at $45.68 per barrel
London – FTSE 100: UP 0.4 percent at 6,712.97
New York – Dow: UP 5.0 percent at 22,878.45 (close)