Asian markets gain ahead of ECB meeting
Asian markets mostly gained in early trading Wednesday, ahead of expected further monetary easing by the European Central Bank.
The ECB is expected to take rates even deeper into negative territory at its Thursday meeting. Policy makers have indicated the ECB could introduce a tiered system of deposits, which would see only a portion of deposits subject to negative rates, which could ease a further hit to the banking sector’s profitability.
Investors may also have been encouraged by a lack of bad news on the trade-war front.
“The U.S.-China tug of war will continue, but there is growing sense that U.S.-China sentiment may be shifting to a state of trade-war neutrality,” said Stephen Innes, Asia-Pacific market strategist at AxiTrader. Innes also noted the ouster of U.S. National Security Adviser John Bolton may be good for global markets. “From a geopolitical risk perspective, it does lessen war-risk premiums, especially in Syria, Venezuela and Iran, and opens the door to more friendly discussion with North Korea,” he said.
Japan’s Nikkei NIK, +0.85% rose 0.9% and Hong Kong’s Hang Seng Index HSI, +1.35% edged up 1.4%. The Shanghai Composite SHCOMP, +0.00% slipped 0.1% and the smaller-cap Shenzhen Composite 399106, -0.25% fell 0.2%. South Korea’s Kospi 180721, +0.75% gained 0.8% as the government said it would file a WTO complaint over Japan’s trade curbs against it. Singapore’s Straits Times Index STI, +1.02% advanced, while benchmark indexes in Taiwan Y9999, +0.18% and Indonesia JAKIDX, -0.03% were about flat and stocks dipped in Malaysia FBMKLCI, +0.07% . Australia’s S&P/ASX 200 XJO, +0.14% rose 0.1%.
Among individual stocks, Sony 6758, +1.16% gained in Tokyo trading, along with Honda 7267, +2.62% and oil producer Inpex 1605, +4.27% , while Nintendo 7974, -1.27% fell after Apple Inc. AAPL, +1.18% announced pricing for its videogame subscription service. In Hong Kong, HSBC 5, +2.63% and New World Development 17, +3.34% rose while CSPC Pharmaceutical 1093, -1.68% fell. SK Hynix 000660, -1.08% declined in South Korea while Apple component maker Largan Precision 3008, +3.44% surged in Taiwan after new iPhones were announced. Rio Tinto RIO, +2.42% and Westpac WBC, +1.44% gained in Australia.
On Wall Street, investors continued to flock to smaller-company stocks they see as being better shielded from the fallout of the costly trade war between the U.S. and China than large multinationals.
The S&P 500 index SPX, +0.03% inched up 0.96 points, or less than 0.1%, to 2,979.39. The Dow Jones Industrial Average DJIA, +0.28% rose 73.92 points, or 0.3%, to 26,909.43. The average was briefly down 118 points. The Nasdaq COMP, -0.04% , which is heavily weighted with technology stocks, slid 3.28 points, or less than 0.1%, to 8,084.16.
The U.S. market has been gaining ground for two weeks as investors remain confident in the strength of the economy, despite the lingering trade war between the U.S. and China.
The feud between the world’s two largest economies has been injecting doses of volatility into the market as both sides escalate and then pull back. Recent plans for trade talks to resume in October raised some hope on Wall Street for a resolution.
Meanwhile, investors continue to watch the steady flow of economic data for a clearer picture of the U.S. economy’s health. Recent reports have been a mixed bag, including a Labor Department report Tuesday that showed both a slip in job openings as well as a slight increase in hiring in July.
The Labor Department will report the latest consumer price index figures on Thursday and the Commerce Department will report August retail sales data on Friday. Economists continue to expect the Federal Reserve to cut interest rates at its meeting next week to help maintain U.S. economic growth.
Benchmark crude oil CLV19, +0.87% rose 40 cents to $57.80. It fell 45 cents to $57.40 a barrel on Tuesday. Brent crude oil BRNX19, +0.80% , the international standard, gained 33 cents to $62.71 a barrel.
The dollar USDJPY, +0.18% rose to 107.54 Japanese yen from 107.39 yen on Tuesday.
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