Asian equities staged a recovery on Tuesday, recouping a portion of their recent losses as they tracked the resilience witnessed in Wall Street. However, underlying apprehension lingered concerning the ongoing Israel-Hamas conflict and the impending economic data releases from China.
Technology shares emerged as the day’s top performers, propelling key indices, including Hong Kong’s Hang Seng Index, South Korea’s KOSPI, and Japan’s Nikkei 225, which posted gains ranging between 0.5% and 1%, largely on the back of robust performance in the technology sector.
The strong finish on Wall Street the previous day provided a positive impetus to regional stocks. Notably, technology heavyweights closed higher, setting the stage for the third-quarter earnings season.
Market sentiment also received a boost from stronger-than-anticipated non-oil export figures from Singapore, often considered a barometer for trade activity in the Asian region.
Nevertheless, most Asian markets had been grappling with significant losses over the preceding week, primarily driven by concerns related to the Israel-Hamas conflict. Even though an agreement between the U.S. and Israel to permit humanitarian aid into Gaza offered a degree of relief, markets were still on edge about the potential spill-over effects of the conflict in the broader Middle East region.
In Australia, strength in commodity stocks lifted the ASX 200 by 0.5%, with Rio Tinto Ltd (ASX:RIO) witnessing a 1.6% surge in its stock price after recording increased third-quarter shipments. Additionally, BHP Group Ltd (ASX:BHP) advanced by 0.8%.
However, Indian equities showed signs of a muted opening, with futures for India’s Nifty 50 index indicating a flat start to the day. This outcome was primarily attributed to the anticipation of softening wholesale inflation data, as Monday’s release indicated that price pressures remained in negative territory for a sixth consecutive month, albeit with high food prices.
Chinese equities displayed weakness as the shadow of GDP data loomed over the market. Investors anxiously awaited the third-quarter gross domestic product figures set to be unveiled on Wednesday. These figures were expected to underscore the continuing fragility in China’s economic growth.
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indices trailed behind their regional counterparts, enduring losses of 0.1% and 0.3% respectively. At the same time, doubts began to emerge regarding the extent of support the economy was deriving from recent monetary stimulus measures, just ahead of the People’s Bank of China’s decision on its benchmark loan prime rate. Market consensus suggested that the rate would remain unchanged following its non-revision of medium-term rates.
Worries about an economic deceleration in China weighed heavily on Asian equities this year, particularly given China’s pivotal role as a major trading partner for the region.
Looking beyond China, attention was also directed toward forthcoming Japanese consumer inflation data. This data was expected to be a crucial factor influencing the Bank of Japan’s deliberations regarding monetary policy adjustments.
