Asian stocks experienced a notable uptick on Wednesday, propelled by a rebound in Chinese markets and bolstered by a robust overnight performance on Wall Street. The resurgence in Chinese stocks was particularly pronounced, reflecting optimism surrounding potential government support. The positive lead from U.S. stock indexes, which approached record highs despite lingering concerns about sustained elevated interest rates, further contributed to the buoyant sentiment in regional markets.
Over the past two sessions, persistent worries over extended interest rates had taken a toll on Asian markets, creating an environment conducive to bargain buying. Notably, Chinese stocks rebounded from multi-year lows, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes recording gains of 0.5% and 0.8%, respectively. Hong Kong’s Hang Seng index also rose by 0.5%, propelled by the strength in mainland Chinese stocks.
Central Huijin, a sovereign fund, played a pivotal role in boosting confidence in Chinese markets by committing to purchasing additional local exchange-traded funds. Bloomberg News reported that Chinese regulators held discussions with President Xi Jinping to explore further supportive measures, while China’s securities regulator expressed its intention to encourage state-backed funds to invest in local markets.
Although the recent positive developments improved sentiment towards Chinese markets, lingering concerns stemming from weak economic conditions in 2023 and early 2024 cast doubts on the sustainability of the rebound. The awaited Chinese inflation data for January, expected to reveal minimal improvement, adds an element of uncertainty.
In broader Asian markets, South Korea’s KOSPI surged by 1.2%, reaching a one-month high, supported by a significant rise in the country’s current account surplus in December. Australia’s ASX 200 rose by 0.6%, nearing a record high following earlier losses prompted by hawkish signals from the Reserve Bank of Australia. Meanwhile, Japan’s Nikkei 225 experienced a marginal dip of 0.2% ahead of anticipated quarterly earnings reports from major players like SoftBank Group Corp. and Suzuki Motor Corp.
In company-specific news, Toyota Motor, the world’s largest automobile maker, saw a nearly 5% surge to a record high after forecasting a record annual profit due to exceptional sales. Additionally, Toyota announced a minority stake investment in Taiwan Semiconductor Manufacturing Corp’s unit in Japan, leading to a 1.7% jump in TSMC shares in Taiwan.
Looking ahead, futures for India’s Nifty 50 index signaled a mildly positive opening, with a focus on the upcoming Reserve Bank of India meeting on Thursday. The stabilizing index follows a recent decline from record highs in the past week.