Asian Stocks Advance amid Tech Strength and Nikkei 225 Hits 34-Year High

Summary

  • Asian stocks found some respite in Thursday’s trading after a rough start to 2024, with most indexes in the region making headway.
  • The Nikkei 225 index in Japan continued its winning streak, reaching highs not seen in decades.
  • Investors are keenly watching the U.S. for key inflation data, which could indicate potential shifts in interest rate policy.
  • Technology and automobile sectors in Asia, particularly in Japan and Hong Kong, led the rally.
  • India’s tech stocks are poised for solid gains, amid anticipated positive earnings from Infosys Ltd.

Most Asian stocks experienced a recovery on Thursday following a challenging start to 2024, as all eyes turned to critical U.S. inflation data that could provide clues about future interest rate adjustments. In Japan, the Nikkei 225 index continued its impressive ascent, setting new multi-decade records this week.

Asian markets were bolstered by Wall Street’s positive performance on Wednesday, with technology giants powering the increase. This rise was mirrored across Asia, with tech-rich indexes registering the most substantial gains.

Nikkei 225 rally persists, reaching 34-year peak

Japan’s Nikkei 225 index outpaced its Asian counterparts, growing 2% on Thursday to a new 34-year peak of over 35,000 points. The index’s rise was fuelled by gains across sectors, with the technology and automobile industries leading the way.

These recent surges in the Japanese market were primarily propelled by the expectation that the Bank of Japan would sustain its ultra-accommodative policy in the short term. This is especially true given stimulus measures following a severe earthquake in central Japan.

This dovish stance by the Bank of Japan also factored into the Nikkei’s standing among the top-performing global stock indexes in 2023, boasting an annual increase of 30%.

Asian tech stocks drive market surge

On Thursday, a majority of other Asian stocks also saw advancements, predominantly driven by a rise in regional technology stocks. Hong Kong’s index was among the standouts, appreciating 1.4% due to a rebound in heavyweight tech stocks.

The South Korean market edged 0.2% higher, although the Bank of Korea’s indications of sustained higher interest rates prevented more significant gains. Meanwhile, Australia’s market grew by 0.4% based on data released on Thursday showing a larger-than-expected increase in Australia’s statistics.

In Taiwan, TSMC saw its stock rise 0.3% after reporting positive December revenue data, fuelling optimism for an AI-driven recovery in chip demand.

China’s indexes also made slight recoveries from multi-year lows, although economic caution persists. Data releases on Friday are likely to show the economy’s sluggish recovery.

Expectations for a strong open for India’s index were high, following global tech stock gains. Investors are also eagerly anticipating Infosys Ltd’s earnings report due later on Thursday.

Are you looking to enhance your investment strategy? Check out InvestingPro+, our innovative AI-powered stock pick tool. Apply the code INVSPRO2024 for an exclusive discount on our Pro and Pro+ subscription plans. Learn more

US CPI inflation data keeps traders alert

However, most Asian markets saw restrained gains as traders braced for key U.S. Consumer Price Index (CPI) data. The data reading is expected to reflect a minor increase in the economy, with projected decreases in certain sectors.

Speculation about the data’s influence on potential early interest rate cuts by the Federal Reserve looms large. The unpredictability around interest rates has led to significant losses in global stock markets since the beginning of 2024.

These developments in the global stock markets have significant implications for forex trading, potentially impacting assets linked to these economies, such as the Australian Dollar (AUD) and the Japanese Yen (JPY).

PIP Penguin
Logo