Asian stocks mostly advanced on Tuesday, buoyed by easing concerns about a US recession that had unsettled markets last week. Key indices saw gains as investors awaited crucial inflation data, while oil prices held onto recent gains due to concerns over escalating conflicts in the Middle East.
Japan’s Nikkei 225 led the rally, climbing more than 2% and briefly surpassing the levels reached at the start of the month before last Monday’s market downturn. This increase was supported by a weaker yen and a commitment from the Bank of Japan not to raise interest rates further.
Despite the calmer market sentiment compared to last week’s volatility, investors remain cautious. Concerns about a significant miss in US job creation and ongoing geopolitical tensions continue to weigh on market sentiment. Trade remains subdued as investors anticipate US consumer and wholesale price data later this week, which could influence Federal Reserve policy.
Market observers warned that the inflation figures could lead to substantial market movements. A weaker-than-expected inflation report might exacerbate economic concerns, while a stronger reading could challenge expectations of rate cuts by the Fed. The Federal Reserve faces a delicate balance between fostering economic growth and controlling inflation, with recent data suggesting that the timing of rate cuts may be critical.
Asian markets experienced mixed results. Tokyo’s Nikkei rose by 2.2% to 35,785.55, while other markets such as Hong Kong, Sydney, Singapore, Wellington, Manila, and Jakarta also saw increases. In contrast, Shanghai, Seoul, and Taipei recorded slight declines.
Oil prices decreased slightly but remained about 8% higher for the week, driven by fears of a broader conflict in the Middle East and heightened tensions involving major oil producer Russia. The White House has warned of possible significant attacks by Iran and its proxies against Israel, following recent assassinations of Hezbollah and Hamas leaders.
Key figures around 0230 GMT:
- Tokyo – Nikkei 225: Up 2.2% at 35,785.55
- Hong Kong – Hang Seng Index: Up 0.2% at 17,153.33
- Shanghai – Composite: Up 0.1% at 2,860.62
- Euro/dollar: Up at $1.0935 from $1.0931 on Monday
- Pound/dollar: Up at $1.2771 from $1.2766
- Dollar/yen: Up at 147.30 yen from 147.26 yen
- Euro/pound: Up at 85.63 pence from 85.61 pence
- West Texas Intermediate: Down 0.6% at $79.56 per barrel
- Brent North Sea Crude: Down 0.6% at $81.80 per barrel
- New York – Dow: Down 0.4% at 39,357.01 (close)
- London – FTSE 100: Up 0.5% at 8,210.25 (close)
