Asia FX muted despite Fed cut bets; Japanese yen slides after PM Ishiba resigns
Updates at 00:30 ET (04:30 GMT) with India open, BYD
Investing.com-- Most Asian stocks rose on Thursday, tracking overnight gains on Wall Street amid growing optimism that the Federal Reserve will cut interest rates later in September.
Chinese markets lagged, with local stock benchmarks tumbling from recent peaks after Bloomberg reported the country’s financial regulators were considering some curbs on stock market speculation.
Regional markets took some positive cues from a strong overnight close on Wall Street on gains in Alphabet Inc (NASDAQ:GOOGL) and Apple Inc (NASDAQ:AAPL). Markets were also encouraged by several Federal Reserve officials flagging the potential for rate cuts due to a cooling labor market.
Soft JOLTS job openings data released on Wednesday furthered this notion, with focus now on upcoming nonfarm payrolls data. S&P 500 Futures rose 0.1% in Asian trade, with markets on edge before the reading.
Asia stocks buoyed by rate cut bets
Japan’s Nikkei 225 index was the best performer in Asia, rising 1.4%, while the TOPIX added 0.9%. Japanese markets were due for some recovery after logging a muted start to September.
Broader Asian markets followed a similar trend. South Korea’s KOSPI rose 0.6%, extending gains after positive gross domestic product data from earlier in the week.
Australia’s ASX 200 surged 0.9%, rebounding from steep losses in the prior session, as positive GDP data dampened some optimism over more interest rate cuts by the Reserve Bank.
Singapore’s Straits Times index rose 0.3%, while India’s Nifty 50 index rose 0.8% in morning trade.
Indian shares were battered by the U.S. hiking trade tariffs on the country to 50% in late-August. But comments from some Indian ministers, that trade talks were still ongoing with Washington, offered local markets relief this week.
Softer-than-expected purchasing managers index data for August, however, dampened sentiment towards Indian markets, as local industries grappled with 25% tariffs imposed by the U.S. earlier in August.
Regional markets tracked overnight gains in Wall Street, as several Fed officials said the central bank was considering lower rates to offset weakness in the labor market. This comes after Fed Chair Jerome Powell in August raised a similar point, although he still flagged caution over sticky inflation.
Fed fund futures showed markets pricing in a nearly 97% chance the Fed will lower rates by 25 basis points during its September 17-18 meeting, according to CME Fedwatch.
China, Hong Kong shares slide as China considers curbs on stock speculation
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 2.5% and 2%, respectively, while Hong Kong’s Hang Seng index shed 1.3%.
BYD Co Ltd (HK:1211) was a major weight on the Hang Seng, losing 2% after Reuters reported the electric vehicle maker had slashed its annual vehicle sales guidance by about 16% to 4.6 million units.
Bloomberg reported that China’s financial regulators were considering some measures to cool local stock markets, amid concerns over the speed of a $1.2 trillion rally since early-August.
Proposed measures include the removal of some short-selling curbs and more controls on speculative trading, the report said, with the measures aimed at eliciting more stability in local equity markets.
Concerns over more government controls sparked steep losses in Chinese indexes, with markets also vulnerable to profit-taking after a strong rally in August. Chinese stocks had vastly outperformed their Asian and global peers in the prior month amid increasing optimism over local artificial intelligence efforts and stimulus measures from Beijing.
Shanghai-listed Cambricon Technologies Corp Ltd (SS:688256), which was at the heart of China’s tech rally in recent weeks, slid more than 9%, extending its losses to 20% off a recent record high.
Other chipmaking stocks, who had all rallied on optimism over more locally-sourced Chinese AI chips, also retreated, with Semiconductor Manufacturing International Corp (HK:0981) and Hua Hong Semiconductor Ltd (HK:1347) losing between 4% and 5%.
High-flying Hong Kong-listed biotechnology companies, such as WuXi AppTec (HK:2359) and WuXi Biologics (HK:2269), also retreated, with the two falling between 1% and 4%.