SINGAPORE – Asian stocks climbed on Wednesday after a rally on Wall Street that was fuelled by strength in US consumer confidence and home sales.
Stocks advanced at the open in Japan, South Korea and Australia.
Contracts for benchmark in Hong Kong also ticked higher, and an index of US-listed Chinese stocks earlier jumped by the most in three weeks.
Yet the data showing economic resilience also underscored the likelihood that the United States Federal Reserve has further to go in tightening monetary policy. Treasuries held losses Wednesday after yields went higher Tuesday at the same time as the Nasdaq 100 jumped almost 2 per cent.
A late-breaking Wall Street Journal report that the Biden administration was considering new curbs on exports of artificial intelligence chips to China set off a retreat in post-market trading for some US tech stocks. That saw Nasdaq 100 futures decline Wednesday.
Tech megacaps had earlier led the rebound in US equities. Tesla rallied after a 6 per cent plunge, Snowflake jumped on an AI-related partnership with Nvidia and Facebook’s parent Meta Platforms gained as Citigroup lifted its target.
Alphabet underperformed, with an analyst saying Google’s owner was moving “too fast” in AI.
Investors in Asia will also be watching the release of figures for Chinese industrial profits, amid calls for Beijing to provide more stimulus, and Australian inflation data, which will help shape the central bank’s thinking on interest rates.
The offshore renminbi and the Australian dollar were both steady in early Asian trading.
The yen strengthened back below 144 versus the dollar after Japan’s top currency official said the authorities will respond should there be excessive foreign exchange moves.
Later on Wednesday, the focus will turn back to a gathering in Portugal and a panel discussion featuring the chiefs of the Fed, the European Central Bank, the Bank of Japan and the Bank of England.
For the first time since early 2022, the US consumer confidence report showed that a larger percentage of people expected higher stock prices relative to lower equity values, according to Bespoke Investment Group.
Meanwhile, new-home sales advanced to the fastest pace in over a year.
“Stocks are bouncing back after some strong US economic data gave a boost to consumer discretionary stocks and as investors piled back into AI trades,” said Oanda senior market analyst Edward Moya. “The strong consumer confidence report will likely suggest expectations are not for the labour market to deteriorate quickly, which should confirm expectations that a recession will not happen this year, but most likely next.”
In the run-up to the results of the Fed’s stress test, a nearly US$3 billion (S$4.05 billion) exchange-traded fund tracking regional lenders was up over 1.5 per cent.
Analysts largely expect banks to sail through the tests, even as regulators explore more stringent requirements in the aftermath of a few collapses in the financial industry.
Elsewhere, oil edged higher as investors weighed the outlook for monetary policy and a mixed industry report on US crude stockpiles. Gold was little changed. BLOOMBERG
