Asian stocks rise, tracking Wall Street, as political tensions ease

A man walks past a stock quotation board flashing the Nikkei 225 key index of the Tokyo Stock Exchange.
A man walks past a stock quotation board flashing the Nikkei 225 key index of the Tokyo Stock Exchange.PHOTO: AFP

SYDNEY (BLOOMBERG) - Asian stocks rose on Wednesday (Aug 23), tracking Wall Street gains, as political tensions took a back seat to optimism that global central bankers meeting this week remain committed to lose monetary policy.

Equity markets opened higher in Tokyo, Sydney and Seoul. The S&P 500 Index jumped 1 per cent and the Dow Jones Industrial Average added almost 200 points amid reports the Trump team and lawmakers may be making progress toward pro-business reforms.

The risk-on tone lifted the US dollar and weighed on havens from Treasuries to gold. Crude gained ahead of a US government report that's forecast to show stockpiles fell. Hong Kong morning trading has been delayed as the city braces for Typhoon Hato.

Japan's Topix index rose 0.6 per cent, while the Kospi index climbed 0.4 per cent and Australia's S&P/ASX 200 Index added 0.2 per cent. The MSCI Asia Pacific Index advanced 0.2 per cent.

Futures on the S&P 500 fell 0.1 per cent as of 9:21am in Tokyo.

The yen fell 0.1 per cent to 109.68 per dollar, extending a 0.5 per cent drop on Tuesday. The Bloomberg Dollar Spot Index added 0.1 per cent. It rose 0.3 per cent in the previous session. The euro was trading at US$1.1759 after falling 0.5 per cent on Tuesday.

There is little top-tier economic data out this week and volumes are being kept low by the Northern Hemisphere summer. The focus turns to the annual conference of global central bankers that kicks off in Jackson Hole, Wyoming, on Thursday with sentiment among investors that global policy makers seem reluctant to tighten liquidity. Geopolitical events will continue to hover in the background. The US tightened its financial restrictions on North Korea, slapping sanctions on Chinese and Russian entities it accused of assisting Pyongyang's development of nuclear weapons and ballistic missiles.

"No one has a lot of interest in being very negative in the market right here, knowing that there's this whatever-it-takes backdrop where central bankers globally just have zero interest in seeing financial conditions tighten too much," Dennis DeBusschere, head of portfolio strategy at Evercore ISI, said Tuesday in an interview on Bloomberg Television.

Indonesia's central bank surprisingly cut its benchmark rate 25 basis points to 4.5 per cent on Tuesday, as low inflation gave it room to resume easing to spur growth.

European Central Bank President Mario Draghi gives a speech in Germany on Wednesday with investors looking for any clues on how the central bank will proceed with its asset purchase program. Minutes from the Governing Council's July meeting released last week showed that officials are still uncertain how to signal changes in their policy settings.

West Texas Intermediate crude was little changed at US$47.64 after climbing 0.6 per cent on Tuesday.

Gold was down 0.1 per cent to US$1,283.64 an ounce, extending a 0.5 per cent decline.