On Wednesday, Asian stocks reached their best levels in seven months as several regional markets reopened following vacations, while the Australian dollar reached multi-month highs as rising inflation made higher interest rates more likely.
MSCI’s broadest index of Asia-Pacific equities outside Japan climbed 0.2% to a seven-month high, although it was still trading below the day’s high. South Korean stocks rose 1.3%, the Nikkei gained 0.4%, and Singapore rose 1.6%. Because the Chinese and Taiwanese markets were still closed for the Lunar New Year holidays, trading activity was low.
European markets were expected to start weaker, with Eurostoxx 50 futures down 0.3%, German DAX futures down 0.2%, and FTSE futures unchanged.
S&P 500 e-mini futures down 0.5%, while Nasdaq futures fell 0.8%.
Globally, equities have rebounded well this year after a disastrous 2022, on optimism that inflation is nearing a high and that the rise in US interest rates will slow. The removal of COVID regulations in China, as well as the reopening of its borders, has strengthened investor confidence even further. The MSCI Asia index has risen 9% this year after falling nearly 20% in 2022.
On Tuesday, U.S. market indices finished mixed as firms announced higher-than-expected earnings while warned of a challenging year ahead. In January, data indicated that business activity in the United States fell for the seventh consecutive month.
Microsoft shares gave back the majority of their 4% gain in after-hours trading. The tech titan’s better-than-expected earnings demonstrated some resilience in the face of a sluggish economy, but the sector’s sales growth was disappointing.
MSCI’s all-country global index set a new five-month closing high. Stronger-than-anticipated economic statistics in Europe reduced market fears of a sudden recession, but interest rates are still likely to rise despite falling oil costs, which reduce inflationary pressures. The euro drew closer to a nine-month high versus the dollar, as euro bulls were buoyed by a brighter economic prognosis for the eurozone in the face of concerns of a US recession.
On Wednesday, Australian equities markets dipped 0.3% after a surprise rise in inflation to a 33-year high in the fourth quarter of 2022 bolstered the argument for the Reserve Bank of Australia to continue hiking interest rates. The New Zealand currency fell as the country reported annual inflation of 7.2% in the fourth quarter, falling short of the central bank’s target of 7.5%.
Crude oil prices in the United States remained unchanged at $80.3 per barrel after decreasing the previous day as preliminary data showed a larger-than-expected increase in US oil stocks.
Gold prices fell to $1,927 per ounce, down from a nine-month high reached the previous session.