Investors reacted with optimism to US inflation figures that raised expectations of a Federal Reserve rate cut in the next few weeks.
The Nikkei-225 index in Japan continued to rise, breaking records for the second day running, and strong earnings from Chinese corporations added fuel to fire.
There was widespread buying. The Nikkei index in Tokyo rose another 1% on Tuesday after its record session. Meanwhile, the Topix Index gained 0.72%.
As Wall Street’s gains were followed by the markets, there was a rally across Asia. South Korea’s Kospi rose 1.07%, and Australia’s S&P/ASX 200 climbed 0.29%.
Vote of Confidence in Japan Inc
Nikkei’s run to record is not just driven by Fed speculation. The confidence that Japan is on the right track to economic growth has grown. Yokohama Rubber gained an incredible 10% and Renesas Electronics rose by over 7%.
Analysts say that this asset appreciation is a reflection of a fundamental change. Analysts at Fitch Solutions said that the recent Japanese asset appreciation is a reflection of positive government steps to improve corporate governance and capital markets, including corporate awareness to equity value.
Research firm said that “the efforts to avoid deflation will continue to grow” if the Liberal Democratic Party, which is in power at present, continues to follow its policy of opening up markets for more foreign workers and investment.
Tencent soars as the dragon roars
Positive sentiments were also evident in China. The Hang Seng Index of Hong Kong rose 1%, while the CSI 300 on the mainland added 0.33%.
According to LSEG, the Shanghai Composite Index soared to its highest level intraday since December 2021. This is a sign of a significant breakout.
Tencent Music Entertainment Group was a standout, with its share price rocketing 16%. This surge was a result of the company’s second quarter revenue and profit exceeding estimates, largely due to robust subscriber growth.
The company reported revenue of 8,44 billion Chinese Yuan ($1.18billion) compared to estimates of 7,98 billion Chinese Yuan. Its chairman attributes this performance to its broad-based strengths.
Cussion Pan, the executive chairman of the company, said that while music subscriptions remained an important growth driver for our business, we also saw a significant increase in our suite of services related to music, including advertising, concerts and merchandise from artists.
Mumbai is poised to rebound
The Indian stock exchanges are expected to be lifted by this wave of optimism, which will set the scene for a dramatic reversal in the session before.
The Sensex as well as the Nifty 50 will likely open higher tomorrow, and the Gift Nifty is pointing towards a positive start. Gift Nifty was trading at 24,619, which is a premium of 64 points to the Nifty Futures last closing.
After a pause on the stock market, which ended its streak of gains last Tuesday, these expected gains are a welcome surprise.
The Sensex fell 368.49 to close at 80.235.59 while the Nifty50 settled 97.65 lower at 24.487.40. This makes Wednesday’s expected rally a return to normality.
The ICD first published this post Asian Markets Open: Nikkei Soars 1% and Sensex Rebounds on US Inflation Relief
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