Aug 16 2024: Asian stocks soared on Friday, mirroring Wall Street’s strong performance as positive U.S. economic data alleviated recession concerns. The optimism was further fueled by expectations of potential U.S. interest rate cuts.
Key Highlights:
- Wall Street Gains Boost Asian Markets Asian stocks followed Wall Street’s sharp rise on Thursday, driven by robust U.S. retail sales data that bolstered confidence in the U.S. economy. Earlier in the week, softer inflation figures kept the market’s anticipation of a 25 basis point rate cut in September alive.
- Japan’s Nikkei Leads Regional Gains Japan’s Nikkei 225 and TOPIX indices were the top performers in Asia, with gains of 3.2% and 2.5% respectively. These indices have surged between 7% and 8.5% over the week, rebounding from four consecutive weeks of significant losses that had pushed them into bear market territory. The rebound was supported by better-than-expected Q2 GDP data, which highlighted an improving economy driven by rising wages and increased personal spending. However, analysts at JPMorgan cautioned that the recent gains were primarily driven by domestic investors, with foreign investors still wary of re-entering the Japanese market.
- Hong Kong Stocks Rally on Strong Earnings Hong Kong’s Hang Seng Index rose 1.6%, propelled by an 8% surge in JD.com following its stronger-than-expected earnings for the June quarter. Alibaba Group also gained 3.6%, despite missing earnings estimates, as speculation about an upgrade to its Hong Kong listing—which could make it eligible for mainland Chinese investor purchases—boosted the stock.
- Chinese Markets Lag Despite Stimulus Hopes In contrast, Chinese stocks underperformed, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes both rising just 0.1%. Mixed economic data from China tempered investor enthusiasm, despite additional stimulus pledges from the People’s Bank of China. The central bank is expected to decide on its benchmark loan prime rate next week, following a surprise rate cut in July aimed at stimulating growth.
- Broader Asian Markets See Gains Other Asian markets also advanced, supported by reduced fears of a U.S. recession and ongoing bets on U.S. rate cuts. Australia’s ASX 200 rose 1.3%, while South Korea’s KOSPI jumped 1.8% in catch-up trading. Futures for India’s Nifty 50 index indicated a strong opening, as the market was set to rise sharply after Thursday’s holiday.
