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Asia stocks higher, Nikkei hits a new 34-year high

dollar index

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.7%, with the IT index soaring more than 2%

Asian stocks rose on Thursday, with the Nikkei hitting a new 34-year high, while the dollar took a breather near a three-month high as markets evaluate when the Federal Reserve is likely to start its easing cycle after a run of strong economic data.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.7%, with the IT index soaring over 2%. Taiwan stocks added 2.6% higher, with chipmaker TSMC nearly 8% higher.

Hong Kong’s Hang Seng Index eased 0.67% in early trading. China’s markets are shut for the week due to the Lunar New Year holidays.

Japan’s Nikkei remains on the charge and advanced in early trading to 38,127, its highest since January 1990 and was inching closer to surpass its record high.

The yen inched up but traded near the important 150 per dollar level. The yen was last at 150.26 per dollar.

The 150 level on the pair has been seen in the past as a potential catalyst for intervention by Japanese monetary authorities. It was just past this level that led them to intervene to boost the yen in late 2022.

Data on Thursday showed Japan’s economy slid into recession as it unexpectedly dipped for a second consecutive quarter on weak domestic demand, raising uncertainty about the central bank’s plans to exit its ultra-easy policy this year.

The market’s expectations for a March/April rate hike will likely die down, per ING economists, who maintained their Bank of Japan call for a June rate hike but with the growing possibility of delay to the third quarter of this year.

They added: Inflation is also slowly easing, which, combined with another year of solid wage growth means that private consumption is likely to bounce back. If so, we continue to believe that the Bank of Japan will deliver its first rate hike in June.

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