Most Asian stocks advanced on Wednesday, tracking overnight gains in Wall Street and as strength in technology shares offered support.
Japanese markets lagged as a Bank of Japan survey showed improving confidence among major local manufacturers– a trend that could give the central bank more impetus to hike interest rates.
Regional trading volumes were dulled by holidays in China and Hong Kong for the National Day. Mainland China markets will remain shut until the middle of next week.
Indian markets stemmed recent losses after the Reserve Bank held interest rates as expected and forecast stronger economic growth this year.
Asian markets took some positive cues from a stronger overnight close on Wall Street. But this momentum was seen running dry in the face of a U.S. government shutdown, after bipartisan efforts to approve more funding largely failed.
S&P 500 Futures fell nearly 0.5% in late Asian trade after the U.S. government began shutting down from 0400 GMT.
Asia tech tracks Wall St gains
Tech-heavy Asian bourses were the best performers on Wednesday, with South Korea’s KOSPI up 0.8%.
Tech stocks tracked overnight gains in their U.S. peers, which were encouraged by lingering optimism over the artificial intelligence trade. An element of bargain buying also aided the sector, after it clocked steep losses through most of September.
But overall gains in tech were limited by growing uncertainty over the path of U.S. interest rates, after Dallas Federal Reserve President Lorie Logan flagged caution over more interest rate cuts.
Logan’s comments echo those from a host of other Fed officials who have questioned the need for aggressive interest rate cuts amid relative resilience in the U.S. economy.
But this narrative could now be upended by a prolonged government shutdown, which is also expected to delay the release of key nonfarm payrolls data later this week.
Japan stocks decline on rate hike jitters
Japan’s Nikkei 225 and TOPIX indexes were the worst performers in Asia, falling 0.7% and 1.5%, respectively.
Local stocks were quashed chiefly by increasing concerns over an interest rate hike by the BOJ, after a survey showed increasing confidence among the country’s biggest manufacturers.
The BOJ’s “tankan” survey suggested that Japan’s export-heavy economy was not as badly affected by U.S. trade tariffs as markets had feared, giving the central bank more headroom to hike interest rates.
The central bank is widely expected to consider hiking rates during a meeting in late-October.
Expectations of a BOJ rate hike buoyed the yen, which in turn weighed on major export stocks.
Broader Asian markets were a mixed bag. Singapore’s Straits Times index rose 0.6% on strength in tech shares, while Australia’s ASX 200 fell 0.3%, extending losses after the Reserve Bank of Australia struck a hawkish tone on Tuesday.
Mining giant BHP Group Ltd (ASX:BHP) fell 2% and was a major weight on the ASX after Bloomberg reported that China had instructed local firms to temporarily halt purchases of new dollar-denominated iron ore cargoes from the miner.
Indian stocks edge higher as RBI holds rates
India’s Nifty 50 index rose 0.2%, stemming recent losses after the RBI held interest rates as expected.
The central bank flagged heightened caution over increased U.S. trade tariffs, which are expected to dent India’s export industries.
The RBI also said it was waiting to see the full effects of its policy actions earlier this year, where it cut rates by a cumulative 1%.
Still, RBI Governor Sanjay Malhotra said recent goods and services tax reforms by the Narendra Modi government were expected to offset some tariff-related headwinds.
Malhotra hiked the RBI’s annual gross domestic product outlook-- to 6.8% from 6.5%-- and trimmed the bank’s consumer price index inflation guidance.
Source :
https://www.investing.com/news/stock-market-news/asia-stocks-buoyed-by-tech-gains-japan-slips-on-rate-hike-worries-4264934
