Most Asian markets extend rally after fresh Wall St record

Hong Kong (AFP) – Asian markets mostly rose Monday, building on last week’s rally with traders buoyed by the knowledge that US borrowing costs will remain at ultra-low levels for the foreseeable future.

The US central bank’s pledge of trillions of dollars in support to keep financial markets going has been key to a surge in equities from their March troughs, with the tech-rich Nasdaq almost doubling in that time as people stay home.

And boss Jerome Powell’s speech Thursday, marking a shift in the Fed’s inflation policy, hammered home that promise, helping fire the S&P 500 and Nasdaq to more record highs. The Dow also advanced to erase all its losses for the year to date.

“With a low, neutral Fed funds rate, a de-emphasis of inflation overshoots and a focus on employment, monetary policy will be highly stimulative for a long, long time. Indeed, music to the stock market’s ears,” said Stephen Innes at AxiCorp.

He said during the financial crisis, the bank began cutting interest rates in mid-2007 and did not lift them until more than eight years later, and it could take just as long to see them lifted again.

“COVID-19 was a much more massive hit to the labour market than the financial crisis. So, we could be looking at the first hike into 2028, provided there are no further hiccups,” he added.

Tokyo led advancers, surging two percent after losing more than one percent Friday in reaction to Japanese Prime Minister Shinzo Abe’s resignation.

While the news fanned fears of uncertainty in the country, analysts said no major confusion is expected with reports saying his right-hand man Yoshihide Suga is set to stand as his successor.

– Buffett’s Japanese bet –

Trading houses were the big winners after US investment legend Warren Buffett’s Berkshire Hathaway said it has bought slightly more than five percent stakes in each of Japan’s big five companies.

Marubeni Corp surged more than 10 percent, Sumitomo Corp and Mitsubishi Corp were up around nine percent and Mitsui & Co gained more than six percent. Itochu Corp also rallied.

In other markets, Hong Kong and Shanghai both saw big gains, while Sydney, Singapore and Seoul were also well in the green.

Chinese investors welcomed news that the country’s services sector saw a forecast-beating improvement in August, lifting hopes that crucial domestic consumer spending was picking up. The news offset a slight weakening of factory activity.

“This could be due to the strong demand for cross-provincial leisure trips as families spend summer holidays within mainland China because overseas travel restrictions remain mostly unchanged,” said Iris Pang, chief economist for greater China at ING.

Wellington shares were slightly lower, with trading continuing despite further cyberattacks that shut the market down four times last week.

While the foreign-sourced attacks forced operator NZX’s website offline, the company said the bourse itself was trading as normal.

NZX chief executive Mark Peterson said US cyber-defence experts Akamai Technologies had been brought in to help repel the attacks, alongside network provider Spark and New Zealand’s GCSB spy agency.

– Key figures around 0300 GMT –

Tokyo – Nikkei 225: UP 2.0 percent at 23,329.47 (break)

Hong Kong – Hang Seng: UP 1.3 percent at 25,742.11

Shanghai – Composite: UP 1.0 percent at 3,437.48

Euro/dollar: DOWN at $1.1901 from $1.1903 at 2100 GMT on Friday

Dollar/yen: UP at 105.56 yen from 105.34 yen

Pound/dollar: DOWN at $1.3338 from $1.3349

Euro/pound: UP at 89.23 pence from 89.13 pence

West Texas Intermediate: UP 0.3 percent at $43.09

Brent North Sea crude: UP 0.6 at $46.06 per barrel

New York – Dow: UP 0.6 percent at 28,653.87 points (close)

London – FTSE 100: DOWN 0.6 percent at 5,963.57 (close)