Asian equity markets were broadly higher on Tuesday, with stocks in Hong Kong and Japan leading gains to track overnight strength on Wall Street, thanks to upbeat U.S. data.
The Hang Seng Index HSI, +2.25% opened the fourth quarter with a 1.6% gain, in part catching up to the region’s gains on Monday, when the city’s stock exchange was shut for a holiday. Markets in China and South Korea are closed for the entire week.
Key Hong Kong heavyweights surged, led by a 7.3% rise in car maker Geely 0175, +12.27% , following Morgan Stanley’s rating upgrade to overweight. Tech giant Tencent 0700, +2.66% added 2.2%, while lender HSBC 0005, +1.18% was up 1%.
Gains in Hong Kong come after all major U.S. stock indexes notched fresh records on Monday, as data helped bolster optimism about the economy.
Manufacturing activity in the U.S. reached a 13-year high in September, with the Institute for Supply Management’s reading on Monday exceeding economist expectations. But some analysts advise investors to be cautious.
“With the market pricing in so much optimism we are vigilantly watching U.S. data, as the recurring weakness could see it coming down like dominoes,” said Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers in Australia.
In Japan, the Nikkei Stock Average NIK, +1.05% was up 0.8%, thanks to overnight gains in the dollar JPYUSD, -0.033663% , which bought ¥113.07 in morning trade Tuesday, compared with ¥112.76 in late New York trade.
Meanwhile, the stronger dollar weighed on equities in Australia, with the S&P/ASX 200 XJO, -0.49% down 0.3% amid a decline in commodity producers and weakness in Australian banking stocks. BHP Billiton BHP, +0.11% was down 0.2% and the Commonwealth Bank of Australia CBA, -1.55% was off 0.7%.
Nonetheless, trading was muted ahead of the Reserve Bank of Australia’s cash rate decision due later Tuesday. Though the central bank is widely expected to stand pat on rates, investors are watching for comments from RBA Gov. Philip Lowe on the nation’s economic health.
Among other Asian markets, Taiwan’s Taiex Y9999, +0.04% was up 0.2%, while Malaysia’s benchmark index FBMKLCI, +0.28% rose 0.2%, after closing lower for the last 10 trading sessions. In Singapore, the Straits Times Index STI, -0.49% was off 0.2%, while the New Zealand stock benchmark NZ50GR, +0.01% was down 0.1%.
In currencies, the U.S. dollar built on its overnight gains in Asian trade with the WSJ Dollar Index, a broader measure of the currency, trading up 0.2%. The index had closed up 0.5% in New York trade at its highest closing value in more than two months.
Though the upbeat U.S. manufacturing data “does square off with a stronger global recovery,” it could prompt the Federal Reserve to raise rates faster, cautioned Vishnu Varathan, an analyst at Mizuho Bank in Singapore.
That could send the greenback and U.S. Treasury yields higher, prompting a “sell off in higher yielding Asian assets,” he said.
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