Asian Stock Market: Relief rally favors bulls against all odds

  • Asia-Pacific equities track Wall Street, stock futures, ignore downbeat catalysts at home.
  • RBA Minutes, NZ Q3 CPI join fears of Japan intervention to challenges hawks.
  • Britain-inspired optimism extends amid light calendar, lack of major headlines.

Shares in the Asia-Pacific region reverse the week-start losses while tracking their global counterparts during early Tuesday. In doing so, the riskier assets ignore fears emanating from the likely central bank and money market moves at home.

That said, the MSCI’s index of Asia-Pacific shares outside Japan rises around 1.0% to refresh a one-week high whereas Japan’s Nikkei 225 drops 1.50% intraday by the press time.

Talking about the negatives, the RBA Meeting Minutes stated that the board weighed a range of arguments for hiking by 50 basis points, as it had for four months straight, but decided to lift the cash rate by 25 basis points to 2.6%. On the same line, RBA Deputy Governor Guy Bullock mentioned that the board expects to increase interest rates further over the coming months. The policymaker also added that the pace and timing will be determined by data.

Further, New Zealand’s third quarter (Q3) CPI rose to 2.2% compared to the 1.6% market forecast and 1.7% prior. The details also mentioned that the YoY CPI increased to 7.2% versus the 6.6% expected and 7.3% prior.

Elsewhere, Japanese Prime Minister Fumio Kishida stated that he won't comment on specific yen levels but govt ready to take appropriate action as needed. On the other hand, Bank of Japan (BOJ) Governor Haruhiko Kuroda mentioned, “BOJ will keep a close eye on fx, market moves and their impact on the economy.”

Also challenging the equity bulls are the grim updates from China’s annual Communist Party Congress.

Alternatively, hopes that the UK will overcome the recession woes safely underpin the risk-on mood amid downbeat US Treasury yields. Also favoring the equity buyers could be the talks that the policymakers from Japan, China and the UK will announce more stimulus.

Against this backdrop, stocks in China, Australia and New Zealand are around 1.0% to 1.5% positive on a day while those from Indonesia and South Korea trade mixed. Elsewhere, India’s BSE Sensex rises 1.20% intraday by the press time. Furthermore, the risk-on mood allows WTI crude oil to gain half a percent on a day at around $85.10.

Moving on, risk catalysts will be important for fresh impulse amid a lack of major data/events, which in turn keeps the traders on their toes.

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