Asia report: Most markets rise after Fed rate pause

Asia-Pacific markets were mainly green on Thursday, with South Korea leading the gains after the US Federal Reserve maintained its benchmark interest rates.

Investors took comfort in the Fed’s move while closely scrutinising fresh inflation and trade data from the region.

Patrick Munnelly, market analyst at TickMill Group, said Asia markets rallied with shares and bonds gaining, following comments from the Fed indicating a potential halt to interest rate hikes and even the possibility of rate cuts.

“Japan’s Nikkei share average surpassed the psychologically-significant 32,000 mark for the first time in two weeks,” he said.

“This surge was driven by market expectations of an end to the Federal Reserve’s tightening of monetary policy and a peak in US bond yields.

“The Nikkei’s 225 components had a mixed performance, with 136 rising, 88 falling, and one remaining flat.”

Munnelly noted that in China, the blue-chip Shanghai Composite dipped, while Hong Kong’s Hang Seng saw a notable increase.

“The non-committal stance of the Fed chief led investors to strengthen their bets on a pause in the interest rate hike cycle and the possibility of rate cuts, contributing to the positive market sentiment.”

Most markets rise, Seoul leads gains

In Japan, the Nikkei 225 rose by 1.1% to 31,949.89, and the Topix index increased by 0.51% to 2,322.39.

Advantest, Kikkoman, and Dainippon Screen Manufacturing performed well on Tokyo’s benchmark, with gains of 10%, 8.05%, and 7.7%, respectively.

China’s markets, on the other hand, faced some pressure, with the Shanghai Composite falling by 0.45% to 3,009.41 and the Shenzhen Component declining by 0.94% to 9,734.77.

China Bester Group Telecom and EmbedWay Technologies Shanghai experienced losses in Shanghai, dropping by 8.56% and 6.84%, respectively.

In Hong Kong, the Hang Seng Index increased by 0.75% to 17,230.59, driven by the strong performance of Link Real Estate Investment Trust, Xiaomi, and Henderson Land, which recorded gains of 6.69%, 6.05%, and 4.62%, respectively.

South Korea’s Kospi outperformed other markets, surging by 1.81% to 2,343.12.

Notable gainers in Seoul included POSCO Future M and SKC, with impressive increases of 11.13% and 9.75%, respectively.

Australia’s S&P/ASX 200 also saw gains, rising by 0.9% to 6,899.70, with Mercury NZ and Pinnacle Investment Management posting notable increases of 7.45% and 5.97%, respectively.

In New Zealand, the S&P/NZX 50 surged by 1.78% to 11,044.44, with Mercury NZ and Investore Property leading the way with respective gains of 5.55% and 4.27%.

Currencies in the region saw strength, with the dollar last down 0.47% on the yen at JPY 150.24, as it fell 0.77% against the Aussie to trade at AUD 1.5521, and by 0.98% on the Kiwi, last changing hands at NZD 1.6939.

In oil markets, Brent crude futures were last up 1.74% on ICE at $86.10 per barrel, and the NYMEX quote for West Texas Intermediate rose 1.93% to $81.99.

Inflation hastens in Korea; retail sales growth slows in Hong Kong

In economic news, South Korea’s inflation rate continued its upward trajectory for the third consecutive month in October, reaching 3.8% year-on-year.

That exceeded the expectations of economists polled by Reuters, who had pencilled in a 3.6% increase.

It also surpassed the 3.7% rise recorded in September.

Meanwhile, Hong Kong’s retail sector faced headwinds as retail sales in September experienced their slowest growth rate since January.

Official data showed a year-on-year increase of 13% - slightly lower than the prior month’s 13.7% rise.

Australia, on the other hand, saw adjustments in its balance of goods for September, with official data indicating a narrowing to AUD 6.79bn on a seasonally adjusted basis.

That was the narrowest balance since March 2021 and was also below Reuters-polled expectations for a figure of AUD 9.64bn.

Exports declined by 1.4%, primarily driven by a decrease in non-monetary gold shipments, while imports jumped 7.5%, with a 74% increase in industrial transport equipment imports.

Reporting by Josh White for Sharecast.com.