Asian equities largely advanced on Thursday, buoyed by Wall Street’s gains driven by prominent technology stocks. Japan’s Nikkei 225 led the regional rise, reflecting both a recovery from prior declines and the influence of a weaker yen on earnings from multinational companies.
Nikkei 225 Rallies on Early Gains
Japan’s Nikkei 225 surged 2.8% to 36,605.62 in early trading, marking a significant rebound from previous sharp declines. This increase was partly attributed to the weakening yen, which enhances the value of overseas earnings when converted back into yen. Notable gains included a 2.8% rise in Toyota Motor Corp. and a 1.2% increase in Nintendo Co.
Currency Movements and Corporate News
In currency markets, the U.S. dollar strengthened to 142.53 yen from 142.28 yen. The euro slightly decreased to $1.1016 from $1.1017. Shares of Nippon Steel Corp. remained stable despite concerns raised by Keidanren and other prominent business groups over potential political interference in its acquisition of U.S. Steel Corp. This interference could negatively impact the investment climate in the U.S., as highlighted in a letter to U.S. Treasury Secretary Janet Yellen, who oversees the review of the takeover.
Regional Market Performance
Elsewhere in the region, Australia’s S&P/ASX 200 increased by 0.7% to 8,041.10. Hong Kong’s Hang Seng jumped 1.0% to 17,283.46, while the Shanghai Composite remained relatively unchanged at 2,720.40.
Wall Street’s Tech-Fueled Surge
On Wall Street, the S&P 500 gained 1.1% despite an earlier 1.6% drop. The index ended up within 2% of its all-time high, thanks largely to strong performances from technology stocks like Nvidia, Amazon, Microsoft, and Broadcom. The Dow Jones Industrial Average increased by 0.3%, adding 124 points, while the Nasdaq composite rose 2.2%, driven by a 8.1% jump in Nvidia shares.
U.S. Inflation Data and Federal Reserve Expectations
Recent U.S. inflation data showed a slowdown to 2.5% in August from 2.9% in July, slightly better than expected. However, core prices, excluding food and energy, increased more than anticipated, suggesting a potential rise in inflationary pressures. This data reinforces expectations that the Federal Reserve may cut its main interest rate at its upcoming meeting, the first reduction in over four years. There is concern that such a move might be too late, as U.S. consumers continue to grapple with high prices.
Impact of Big Tech on Markets
The rally in Wall Street was significantly supported by major tech companies. Nvidia’s 8.1% rise, along with Amazon’s 2.8%, Microsoft’s 2.1%, and Broadcom’s 6.8%, drove the S&P 500’s performance. The S&P 500 closed up 58.61 points at 5,554.13, the Dow rose 124.75 points to 40,861.71, and the Nasdaq composite climbed 369.65 points to 17,395.53.
Bond and Energy Market Updates
In the bond market, the yield on the 10-year Treasury rose to 3.66% from 3.64% late Tuesday, while the two-year yield increased more sharply to 3.65% from 3.59%. In energy trading, U.S. crude oil prices gained 19 cents to $67.50 a barrel, and Brent crude added 26 cents to $70.87 a barrel.
Conclusion
Asian markets extended their gains on Thursday, influenced by a strong performance in U.S. tech stocks and a supportive economic environment. The anticipated Federal Reserve interest rate cut and the ongoing adjustments in currency and bond markets will likely continue to shape market dynamics in the coming days.
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