Hong Kong: Hong Kong stocks climbed two percent on Wednesday, extending a rebound from last week’s hammering but most other Asian markets were mixed as nervous investors await the release of key US inflation data fearing fresh volatility.
Tokyo fell to another four-month trough as the yen strengthened against the dollar, at one point hitting a 15-month high, while investors were unimpressed by data showing Japan’s economy grew at a weaker-than-expected rate in the last quarter of 2017.
While Hong Kong and Seoul clocked up healthy rises following a positive lead from Wall Street, uncertainty continues across trading floors after last week’s torment.
The Nikkei closed 0.4 percent down as exporters were hit by the yen, which briefly hit 106.85 to the dollar, a level last seen since Donald Trump’s election win in November 2016.
“Given the recent stock market slump, risk aversion has grown, which prompted safe-haven buying of the yen,” Shinichiro Kadota, senior fx strategist at Barclays Securities, told AFP.
“The dollar’s fall through the 108-yen mark and then 107-yen mark invited even more yen buying,” he said, adding that investors were likely to “stick to yen buying unless their confidence recovers”.
Hong Kong was up two percent, building on the 1.3 percent rise Tuesday, though it had lost more than nine percent over the previous week. Seoul gained more than one percent.
Shanghai pared early losses to close 0.4 percent up, Singapore was flat, Sydney eased 0.3 percent, Wellington dropped 0.8 percent and Jakarta edged up 0.1 percent
But the focus is on the release of US inflation, which could inflame or defuse anxiety about the Federal Reserve’s timetable for lifting interest rates.
Rising US Treasury yields, consumer prices and wages, combined with a strong run-up in equities in recent months, have combined to spark this month’s retreat—wiping trillions off global equities as the era of cheap borrowing comes to an end.
“It certainly feels like the proverbial calm before the storm and rightly so as there plenty of reasons to be cautious,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
However, he pointed out that US investors had pushed Wall Street higher for three straight days “despite the fresh memories of last week’s market carnage in the wake of an inflationary uptick in wage growth”.
On currency markets, the dollar edged up against the euro but was struggling to recover after falling almost one percent against the unit on Tuesday. It pared losses against the pound but was down against most high-yielding currencies including the Australian dollar, South Korean won and Indonesian rupiah.