South Korea and Japan lead rally in Asian shares; Caixin PMI meets expectations

Stocks in Asia rallied on Wednesday, with markets in Japan and South Korea leading gains in the region. Investors also digested the extended gains in oil prices and the release of China’s Caixin manufacturing Purchasing Managers’ Index, which met expectations.

Stateside, markets had closed slightly higher on Tuesday as investors focused on a mix of central bank meetings and tax cut details.

Japan’s Nikkei 225 jumped 1.65 percent, with energy stocks posting gains as oil prices edged up. Automakers also rose while tech stocks were mixed: Mitsubishi Motor was up 1 percent and Inpex rose 3.4 percent. Sony stock surged 10.83 percent after announcing expectation-topping results on Tuesday.

Across the Korean Strait, the Kospi rose 1.18 percent on strength in the tech sector. Samsung Electronics jumped 3.67 percent and SK Hynix gained 3.89 percent.

Down Under, the S&P/ASX 200 rose 0.5 percent, with energy stocks leading gains on the broader index: Santos rose 1.78 percent and Beach Energy advanced 8.46 percent.

Greater China markets trended higher, with the Hang Seng Index rising 0.53 percent. On the mainland, the Shanghai Composite edged up 0.18 percent and the Shenzhen Composite added 0.33 percent.

China’s Caixin manufacturing Purchasing Managers’ Index for October met expectations, coming in at 51.0. The official PMI released on Tuesday had fallen just short of expectations.

Asian corporates slated to report quarterly results in Wednesday include Honda, ANA Holdings and Standard Chartered.

Markets in the Philippines are closed for Wednesday.

Stocks in the U.S. closed slightly higher on Tuesday, with the Dow Jones industrial average and the S&P 500 both notching their seventh consecutive monthly gains as October drew to a close.

The Federal Reserve will deliver its interest rates decision at the end of its two-day meeting on Wednesday U.S. time. Market watchers say the meeting will yield few surprises and most expect no changes in the central bank’s policy this week.

“To be sure, with no ‘presser’ or dot plot release for the November Federal Open Market Committee [meeting], shifts in Fed bets may be somewhat restrained absent express dovish caveats in the statement,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, said in a morning note.

Investors also awaited tax reform details expected later this week and President Donald Trump’s upcoming announcement regarding the next chair of the Fed.

The dollar firmed ahead of the conclusion of the Fed’s meeting, with the dollar index trading at 94.677 at 12:24 p.m. HK/SIN.

Against the yen, the U.S. currency rose to trade at 113.86, compared to Monday’s close of 113.16 yen. Softness in the Japanese currency came after the Japanese central bank kept its monetary policy steady earlier this week.

Meanwhile, U.S. consumer confidence in October rose to its highest levels in nearly 17 years as consumers grew more upbeat after several hurricanes had influenced sentiment in September, a Conference Board survey showed on Monday.

Also in focus will be the Bank of England’s policy meeting on Thursday. Markets are awaiting what could be the central bank’s first interest rate hike in 10 years.

In the lead up to the meeting, the British pound edged down to trade at $1.3270 at 12:25 p.m. HK/SIN.

Macau-based casino operator SJM Holdings announced a 16.5 percent decline in third-quarter profit compared to a year ago. Net profit for the quarter stood at 428 million Hong Kong dollars ($54.9 million). SJM shares performed worse than other Hong Kong casino stocks, falling 1.04 percent.

Meanwhile, Alibaba Group Holding said it would be taking its annual Singles’ Day online shopping event international this year, South China Morning Post reported. The tech giant said it was looking for growth in international sales to exceed local sales, the newspaper (owned by the Alibaba Group) added. Singles’ Day takes place on November 11, but has since evolved into a multi-week-long retail event.

Elsewhere, Sony on Tuesday revised upwards its full-year profit for the fiscal year ending Mar. 31, 2018. The Japanese conglomerate said it expects full-year operating income to come in at 630 billion yen ($5.5 billion), substantially above a forecast of 585.8 billion yen from Thomson Reuters Starmine SmartEstimate.

The New Zealand dollar rose to its highest levels in about a week after the release of data showing the unemployment rate had fallen. The Kiwi dollar traded at $0.6906 at 12:24 p.m. HK/SIN.

Bullish sentiment persisted in the oil markets. Brent crude futures climbed 0.31 percent to trade at $61.13 a barrel and U.S. crude advanced 0.46 to trade at $54.63.

“Given the pace of the move and the general bullish tone in the market, both contracts could be vulnerable to a short term downward correction,” Jeffrey Halley, senior market analyst at OANDA, cautioned in an early Wednesday note. He added that both contracts’ daily relative strength indexes had moved into “strongly overbought territory.” Source: CNBC

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