Asia report: Markets mostly higher as Hong Kong locks down further

Markets in Asia closed mostly firmer on Tuesday, as investors held their breath ahead of the inauguration of US president-elect Joe Biden later in the week, and monitored the ongoing global Covid-19 pandemic.

In Japan, the Nikkei 225 was up 1.39% at 28,633.46, as the yen weakened 0.29% against the dollar to last trade at JPY 103.99.

Of the major components on the benchmark index, robotics specialist Fanuc was up 0.89%, Uniqlo owner Fast Retailing was ahead 3.06%, and technology giant SoftBank Group was 3% firmer.

The broader Topix index added 0.56% by the end of trading in Tokyo, closing at 1,855.84.

On the mainland, the Shanghai Composite was down 0.83% at 3,566.38, and the smaller, technology-centric Shenzhen Composite was 0.96% weaker at 2,378.65.

South Korea’s Kospi surged 2.61% to 3,092.66, while the Hang Seng Index in Hong Kong rocketed 2.7% to 29,642.28.

The blue-chip technology stocks were in the green in Seoul, with Samsung Electronics up 2.35% and SK Hynix 0.38% firmer.

Carmakers were among the big winners on the Korean bourse, with Hyundai Motor leaping 8.51% and Kia Motors soaring 16.64%.

In Hong Kong, the financial and insurance sectors led gains, with life insurance giant AIA up 4.41% and HSBC’s stock in the special administrative region 4.16% further.

Earlier in the day, Hong Kong’s leader Carrie Lam announced that social distancing rules would be expanded in the city, as coronavirus infection numbers reached triple digits once again.

Investors were looking ahead to remarks from former US Federal Reserve chair Janet Yellen later in the day, where she was set to warn the Senate Finance Committee that the country was on track for a serious recession if they did not “act big”.

Yellen, who is Joe Biden’s nominee for Treasury secretary, had prepared remarks saying that neither she nor the president-elect were proposing Biden’s $1.9trn relief package without consideration for the country’s debt burden.

“But right now, with interest rates at historic lows, the smartest thing we can do is act big,” she was set to say in prepared remarks reported by NBC News.

“In the long run, I believe the benefits will far outweigh the costs.”

IG chief market analyst Chris Beauchamp said the markets were looking at “a major change”, headlined by Janet Yellen’s return to public life as Biden’s Treasury secretary and her promise to move quickly on fiscal stimulus.

“Such demand-side economics have not been seen in the developed world for several decades, and promise a major regime change from the era of unbridled deregulation,” Beauchamp said.

“Of course, ultra-low interest rates remain in place, so there is an element of continuity as well, but even a modest uptick in rates will be enough to change the driving factors of this market, unseating the big tech stocks from their position of strength as investors reassess their valuations and prospects of near-term growth and increased regulation.”

Oil prices were higher as the region went to bed, with Brent crude last up 1.41% at $55.52 per barrel, and West Texas Intermediate rising 1.33% to $52.74.

In Australia, the S&P/ASX 200 was 1.19% firmer at 6,742.60, while across the Tasman Sea, New Zealand’s S&P/NZX 50 managed gains of 0.33% to 12,881.31.

The down under dollars were both stronger on the greenback, with the Aussie last ahead 0.41% at AUD 1.2966, and the Kiwi advancing 0.23% to NZD 1.4031.