Asia report: Markets higher as US moves buoy sentiment

Stock markets in Asia were mostly positive at the end of Friday, with China and Japan leading the gains, as investors digested comments from Federal Reserve chair Jerome Powell on the US recovery overnight.

In Japan, the Nikkei 225 was up 0.56% at 29,176.70, as the yen weakened 0.37% against the dollar to last trade at JPY 109.59.

Of the major components on the benchmark index, automation specialist Fanuc and fashion firm Fast Retailing were both up 0.88%, while technology conglomerate SoftBank Group added 1.8%.

The broader Topix index gained 1.46% by the end of trading in Tokyo, to close at 1,984.16.

On the mainland, the Shanghai Composite was ahead 1.63% at 3,418.33, and the smaller, technology-heavy Shenzhen Composite rose 2.23% to 2,214.81.

South Korea’s Kospi gained 1.09% to close at 3,041.01, while the Hang Seng Index in Hong Kong advanced 1.57% to 28,336.43.

Shares in technology juggernaut Xiaomi leapt 6.28% in the special administrative region, and carmaker Great Wall Motor rocketed 10.38%, after reports that the pair were preparing to collaborate on electric vehicles.

According to Reuters, which cited people “with direct knowledge”, the plans would involve Xiaomi using Great Wall’s production facilities to manufacture electric cars.

The blue-chip technology stocks were in the green in Seoul, with Samsung Electronics up 0.37% and SK Hynix rising 1.5%.

Fed chair Jerome Powell said overnight that both the accelerated vaccine programme in the US, and financial support from Congress, had allowed the American economy’s recovery from Covid-19 to be quicker than anticipated.

“As we make substantial further progress toward our goals, we’ll gradually roll back the amount of Treasury [notes] and mortgage-backed securities we’ve bought,” Powell said in an interview with NPR.

“We will very gradually, over time and with great transparency, when the economy has all but fully recovered, we will be pulling back the support that we provided during emergency times.”

Han Tan, market analyst at FXTM, said that market risk sentiment was buoyed overnight by the lower-than-expected US weekly initial jobs claims, while continuing claims dropped below the four million mark for the first time since the start of the Covid-19 pandemic.

“US stocks also reacted positively to president Biden’s upward revision to his ambitious vaccination target, which now aims to administer 200 million doses by the end of April,” Tan said.

“Markets have shown that investors’ optimism is predicated on the vaccine’s rollout reaching more of the population, forming the basis for the expected economic recovery.

“The rotation into cyclically-sensitive sectors is testament to such hopes, while the euro’s declines against its major peers are proof of persisting concerns over the shambolic efforts of the EU’s vaccination rollout.”

Oil prices were higher as the region entered the weekend, with Brent crude last up 1.84% at $63.09 per barrel, and West Texas Intermediate rising 2.1% to $59.79.

In Australia, the S&P/ASX 200 managed gains of 0.49% to 6,824.20, as the hefty financials subindex rose 0.4%.

The sunburnt country’s big four banks were mixed, with Commonwealth Bank of Australia down 0.62%, while Australia and New Zealand Banking Group added 0.97%, National Australia Bank gained 0.77%, and Westpac Banking Corporation finished 0.91% firmer.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 went against the regional trend, slipping 0.32% to 12,348.83, after a volatile week for the country’s energy generators.

Genesis Energy closed flat in Wellington, while Contact Energy was down 0.88%, Mercury NZ slipped 3.88%, and Meridian Energy was 1.07% weaker.

The down under dollars were both stronger on the greenback, with the Aussie last ahead 0.47% at AUD 1.3131, and the Kiwi advancing 0.54% to NZD 1.4311.