Feb 21 2024: Asian stocks saw a lift on Wednesday, driven by optimism surrounding measures taken by policymakers in China to bolster confidence. However, investors remained on edge ahead of Nvidia’s earnings amidst the recent AI-driven global rally frenzy.
Market watchers awaited the Federal Reserve’s January meeting minutes for further insights into the policy outlook, with expectations of early U.S. interest rate cuts diminishing due to persistent inflationary pressures.
MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.62% on Wednesday, reaching its highest level in seven weeks, with Chinese and Hong Kong stocks leading the gains.
China’s blue-chip CSI300 index surged 1.8%, while Hong Kong’s Hang Seng Index jumped 3%, supported by the largest reduction in the nation’s benchmark mortgage rate aimed at boosting the struggling property market.
“Regulators are exercising caution and adopting a gradual approach, with potential for further measures if necessary,” noted Jian Shi Cortesi, Investment Director at GAM Investments.
However, market sentiment remains reliant on improvements in economic activity and corporate earnings for sustained recovery.
In Japan, Tokyo’s Nikkei closed down 0.26%, hesitating near its all-time high set in 1989 as investors awaited Nvidia’s earnings release.
Nvidia’s shares stumbled on Tuesday, causing a 4% drop in the tech-heavy Nasdaq and weighing nearly 1% on Nasdaq futures, while S&P 500 futures also edged lower.
European bourses were poised for a subdued start, with Eurostoxx 50 futures marginally up, German DAX futures slightly down, and FTSE futures lower.
Traders awaited the Federal Reserve’s meeting minutes later in the day for insights into the timing of potential easing measures. Persistent inflation data has led to a shift in market expectations, with June now being priced in as the likely starting point for easing, compared to March at the beginning of the year.
The dollar has been buoyed by the changing rate outlook, holding near three-month highs against the yen. Japan’s exports exceeding expectations in January provided some relief amid concerns about demand and output following unexpected fourth-quarter recession data.
Meanwhile, U.S. crude and Brent crude prices edged higher, while iron ore futures remained at their lowest levels in over three months due to mounting concerns over demand in China.
Spot gold prices increased to $2,031.55 an ounce, reflecting a 0.4% rise.