Investors pounced heavily on Thursday morning.
(Photo: dpa)
Shanghai/Tokyo Asian markets continued the recovery on Wall Street on Thursday. Japan’s leading index, the Nikkei 225, rose by more than 3.5 percent in the meantime before going into the lunch break at 26,530 points, 2.98 percent above the previous day’s closing price. The Tokyo Stock Exchange’s more broadly weighted Topics had risen by two percent by then, and South Korea’s Kospi by 1.8 percent to 2,707 points.
The buying mood was triggered by three major pieces of news, which the markets rated positively overall: The US Federal Reserve not only increased interest rates on Wednesday as expected, but also indicated further interest rate hikes this year. Media reports on Wednesday suggested that peace talks between Russia and Ukraine were making progress. Third, China’s government signaled support for the collapsing stock market.
“The net result of all this was a big stock rally,” major bank ING told its Asian clients. “A faint indication that China’s zero-Covid policy could also be eased slightly will not have done any harm either,” according to ING’s strategists. The Chinese Hangseng index climbed 4.3 percent as of 10:30 a.m. local time on Thursday morning, while the Shanghai Composite index rose 1.7 percent.
Earthquake in Japan does little to dampen investor sentiment
Many experts warn that yesterday’s gains on the stock exchanges are already a turnaround on the stock market. But investors in Japan in particular responded positively to the positive target after the heavy losses of the past few weeks. Not even a strong earthquake, measuring 7.3 on the Richter scale, which hit north-east Japan just before midnight could dampen the desire to buy. The prospect of up to seven interest rate hikes by the US Fed this year also had little effect on the markets. Instead, the planning security for future US monetary policy supports the buyback movement, judged the Japanese business newspaper Nikkei.
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Technology and China-oriented stocks gained the most. The share price of the technology investor Softbank rose by almost nine percent, the electric motor manufacturer Nidec, which is one of the largest suppliers to Chinese electric car manufacturers, by more than seven percent.
Meanwhile, automaker Toyota posted below-average gains. Energy companies like oil company Inpex, whose share price had skyrocketed, lost value again as oil prices fell.
Commodity and foreign exchange markets are signaling relaxation
Another reason for the good mood among Asian investors was the easing on the commodity markets. The price of crude oil from Dubai, the barometer for the Asian oil market, fell to $97.80 per barrel. The weakening mood of crisis on the foreign exchange market was felt even more clearly: the yen continued to lose value.
The dollar exchange rate scratched the mark of 119 yen. The euro even rose by more than one percent to over 131 yen – and thus the level before Russia attacked Ukraine. One factor is the expectation that the US-Japan interest rate spread will now widen. As the US Fed hiked rates, markets are expecting the Bank of Japan’s Monetary Policy Committee to maintain ultra-loose monetary policy at its meeting tomorrow.
More: To combat inflation, the Fed raises interest rates by 0.25 percentage points – and announces further steps. It’s the start of a risky mission.