Asian stock markets climb on Thursday following Wall Street’s rally

Asian stock markets rallied on Thursday following a jump on Wallstreet, thanks to upbeat U.S. consumer data.

The Hang Seng index in Hong Kong rose to 2.3 percent and hit the 19,595.69 mark by mid-afternoon. Tokyo’s Nikkei 225 also posted a 0.5 percent growth and reached 26,507.87 during the trading day.

In South Korea, Kospi traded 1.1 percent higher to 2,353.85. On the other hand, the Shanghai Composite index fell by 0.4 percent to 3,054.43.

Bangkok’s SET rose by 0.42 percent to 1,616.67, while the Taiex index in Taipei climbed 0.53 percent to 7,152.5. MSCI's Asia-Pacific index, excluding Japan, gained 1.1 percent on the same day as well. This year, however, the MSCI’s Asia-Pacific index is on track to shed approximately 19 percent.

India’s Nifty 50 has become the best performer in Asia this year and is projected to grow by five percent by the end of 2022. Analysts attributed this growth to India’s capability of taking advantage of China’s structural shift in supply change.

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Before the Asian stock market opened, Wall Street had concluded its trading session on the rise. Major indexes posted daily gains, which were the highest for December. The Dow Jone rose 1.6 percent to 33,376.48. The S&P jumped 1.5 percent to 3,878.44. Meanwhile, the NASDAQ Composite closed the session at 10,709.37, gaining 1.5 percent.

The Russell 2000 index — which tracks stocks of small U.S. companies — posted a 1.7 percent gain and concluded the day at 1,776.94.

The recent inflation data caused the U.S. stock market to rally on Wednesday. Consumer spending and the job market in the U.S. remained resilient despite high inflation and the Federal Reserve's effort to tame the economy by raising interest rates in succession. Investors began hoping these two vital areas could prevent the country from entering a recession.

According to Wednesday's data, signs of inflation in the U.S. housing market were also present last month. Sales for existing homes dropped for the tenth consecutive month due to high mortgage interest rates — linked with the Fed’s high benchmark rates.

Some investors reported that it could soon cause the central bank to loosen its tight monetary policy. Last week, the Fed hiked the interest rate by half a percentage point, lower than the previous rate setting.

Yen gains momentum

The Japanese yen strengthened against several currencies following the Bank of Japan’s announcement that it would widen the target range for its 10-year government bond yields. According to market analysts, this policy change indicated the BoJ’s plan to adopt a more hawkish monetary policy to deal with the country’s economic turmoil.

This week, Japanese government 10-year bond yields have risen by 23 basis points to 0.480, against the BoJ’s new ceiling of 0.5 percent. The current yields are the highest since mid-2015.

Meanwhile, the dollar lost 3.5 percent against the yen to hit 131.93 yen. Analysts expect the greenback to continue weakening against the Japanese currency toward the 125 yen mark in 2023.

The euro also fell by 3.6 percent against the yen at 140.11 during the week. The currency, however, stood firmer against the dollar at $1.0622.

Analysts at Capital Economics said assets owned by Japanese investors would lower in value due to the BoJ’s policy shift. Insurance companies would be significantly affected by the drop in bond prices. The pension plan would be affected as well. Regardless of the adversities, analysts said lower investment returns would not “carry systemic risks.”