Asian stocks tipped to march higher on back of strong global economy
Stocks in Asia look set to gain on Wednesday, spurred by bets that the global economy can withstand higher US interest rates as early as next month.
Equity-index futures in Japan, Hong Kong and Australia all pointed to gains. The S&P 500 Index slipped from a record, while technology shares pushed the Nasdaq Composite Index to an all-time high. The greenback traded at the highest in a month on Tuesday in the wake of hawkish comments from Federal Reserve officials.
Safe haven assets caught a bid, with the yen strengthening, after Sky News reported North Korea will proceed with a nuclear test. Markets in India, Malaysia, Sri Lanka, Singapore and Thailand are closed for holidays.
Japan’s Nikkei 225 Stock Average is closing in on the 20,000 level, and AMP Capital Investors Ltd said cheap valuations will allow for further gains. The start of trading in China will be closely watched after a rout that’s caused more than US$500 billion in damage took a pause on Tuesday.
Optimism for global economic growth is helping drive down expectations for volatility in equity and fixed-income markets. China data on consumer and producer prices provide the latest figures for investors to assess Wednesday. With global stocks trading near record highs, earnings need to keep delivering to appease investors getting restless about higher equity valuations.
South Korea’s stock market reopens after Moon Jae-in declared victory in the country’s presidential election.
The key events investors will be scrutinising are:
Chinese CPI and PPI data is due. Producer prices are roaring back to end four years of declines. They rose 6.7 per cent in April, according to economists surveyed by Bloomberg, after a 7.6 per cent gain in March. Earnings are expected from companies including Toyota Motor, Deutsche Telekom AG and Snap Inc.
The Bank of England on Thursday publishes its interest-rate decision and quarterly Inflation Report.
So far on Wednesday, the yen traded at 113.75 per dollar as of 8:14 am (7:14 am HKT) in Tokyo, up 0.2 per cent and dropping for the past three sessions.
The Bloomberg Dollar Spot Index edged lower after climbing 0.4 per cent Tuesday.
Futures on the S&P 500 slipped 0.2 per cent. The underlying gauge fell 0.1 per cent Tuesday, while the CBOE Volatility Index edged higher after closing Monday at the lowest since December 1993.
The Stoxx Europe 600 closed up 0.5 per cent and at the highest since August 2015. The yield on 10-year Treasury notes rose one basis point to 2.40 per cent Tuesday after climbing four basis points on Monday. Futures on the Nikkei 225 rose 0.2 per cent in Singapore. Australia’s S&P/ASX 200 Index contracts advanced 0.3 per cent and futures on Hong Kong’s Hang Seng index added 0.5 per cent.