Asian Markets Gain to Follow Wall Street; Shanghai Composite Gains 2.36%
Asia-Pacific markets traded broadly higher Thursday, following a relatively strong finish on Wall Street overnight after U.S. lawmakers passed a $1.9 trillion coronavirus relief package.
The Nikkei 225 in Japan rose 0.6%, or 175.08 points, to 29,211.64 while the Topix index added 0.27%, or 5.18 points, to 1,924.92. The Japanese market in recent sessions had struggled to hold onto gains.
In South Korea, the Kospi rose 1.88%, or 55.58 points, to 3,013.70, buoyed by tech names. Shares of Samsung rose 1.36%, SK Hynix advanced 3.01% and LG Electronics rose 3.51%. Elsewhere, the Kosdaq index added 2.02%, or 17.94 points, to 908.01.
Hong Kong’s Hang Seng Index added 1.47% in late-afternoon trade.
Chinese mainland shares also rose Thursday after struggling in recent sessions as authorities in Beijing set a relatively low GDP target and signaled a shift away from measures designed to keep the economy afloat. The Shanghai composite rose 2.36%, or 79.09 points, to 3,436.83 while the Shenzhen component added 2.23%, or 303.03 points, to 13,866.37.
Australian shares retraced earlier losses as the benchmark ASX 200 finished flat. The heavily-weighted financials subindex slipped 0.38% while the materials sector erased earlier losses and the energy subindex rose 0.38%. Shares of major miners Rio Tinto and Fortescue reversed course to close up 1.06% and 2.21%, respectively. BHP fell 1.68% while banking stocks also declined.
U.S. stimulus, ECB meeting
Overnight in the U.S., the passing of the new stimulus package spurred investors to snap up stocks that will be boosted by a faster recovery from the pandemic. The Dow Jones Industrial Average rose more than 400 points while bond yields fell.
President Joe Biden hopes to sign the relief bill on Friday.
Investors will shift focus to Europe where the European Central Bank is due to meet Thursday. ECB officials in recent weeks have reportedly described the rise in bond yields as “unwarranted tightening” and a situation that needs to be monitored closely.
“In response to rising bond yields, we expect it will signal readiness to step up its weekly bond interventions if necessary and use the full Pandemic Emergency Purchase Programme envelope (EUR1.85trn), and more if required,” analysts at ANZ Research wrote in a Thursday morning note.
“The ECB will also play down temporary strength in euro area inflation, focusing on the medium-term outlook,” the analysts said.
Asian Markets Currencies & Oil
In the currency market, the U.S. dollar traded down 0.14% at 91.699 against a basket of its peers, withdrawing from levels above 92.00 reached earlier in the weeks.
The Japanese yen changed hands at 108.69 per dollar while the Australian dollar rose 0.5% to $0.7773.
Oil prices recovered overnight and advanced Thursday afternoon during Asian trading hours. U.S. crude rose 0.28% to $64.62 a barrel while global benchmark Brent rose 0.28% to $68.09. The moves in oil prices came despite a sizeable jump in U.S. crude inventories following last month’s winter storm in Texas.
Some analysts said oil’s overnight gains came after U.S. gasoline stockpiles fell sharply last week.
“The fall in US gasoline stockpiles over the last two weeks is the largest two‑week decline on record,” Vivek Dhar, a mining and commodities analyst at the Commonwealth Bank of Australia, said in a morning note. The decline happened as “US refinery activity has still not returned back to normal from a deep freeze in Texas last month.”
But Dhar said gains were capped by the rising crude stockpiles.
“Rising US oil supply is a key negative risk for oil prices. However, it is unlikely that rising US oil supply will offset OPEC+ supply discipline and the ongoing recovery in global oil demand as COVID‑19 risks fade,” Dhar said.