Positive Earnings and Weaker Yen Drive Nikkei Higher, China Stocks Struggled to Rebound

Arjun Pandit
05 Feb, 2024
Mumbai

Market indexes in Tokyo, China, and India edged higher in volatile trading, but the indexes in Seoul and Sydney fell.

Global market sentiment was cautious in Monday's trading after the U.S. dollar perked up, crude oil prices fell, and tensions in the Middle East stayed elevated.

In addition, rate-cut expectations were also dashed after the U.S. economy added 353,000 jobs in January, surpassing expectations by a wide margin.

Federal Reserve Chairman Powell confirmed in an interview on Sunday that policymakers may wait after the next meeting in March to cut interest rates.

The U.S. dollar index jumped to an 8-week high against the basket of currencies after comments from Powell suggested that rates are likely to stay higher longer than expected.

Crude oil dropped 0.5% before recovering in late afternoon trading across Asia after the U.S. dollar rebounded and China's regulatory announcement fell short of market expectations.

On the economic front, Australia's December exports increased 1.8% to A$47.1 billion, imports rose 4.8% to A$36.2 billion, resulting in a trade surplus of A$10.95 billion, the Australian Bureau of Statistics reported Monday.  

 

Nikkei Extended Gains on Yen Weakness and Positive Earnings

The Nikkei 225 average jumped 0.6% to 36,373.16 and inched closer to the high of the year so far, and the KOSPI index fell 0.6% to 2,598.68.

Export-sensitive stocks advanced after the Japanese yen fell sharply following the strength in the U.S. dollar.

Canon, Panasonic, Seiko Epson, and Fujitsu advanced between 2% and 7%.

Isetan Mitsukoshi soared 6.5% to ¥1,933.50 after the retailer reported better-than-expected financial results, increased its interim dividend, and announced a stock buyback.

 

China Stocks Rebound In Volatile Trading

Market indexes in China dropped in early trading following comments from Chairman Powell and a lack of specific stimulus from the government.

Stocks in afternoon trading erased morning losses after the China Regulatory Commission pledged to stabilize financial markets and crack down on market speculators in a statement released on Sunday.

But the regulatory agency fell short of announcing concrete steps in the near future.

The CSI 300 index advanced 1.2% to 3,184.64, and the Hang Seng index rebounded 0.3% to 3,184.64.

The Hang Seng index extended its 2024 loss to 9%, the worst-performing index among the leading markets around the world.

Small-cap stock indexes on the mainland China dropped around 5% after the unwinding of structured products linked to small capitalization stocks triggered the sale of underlying securities.

Baidu, Tencent, Alibaba Group, and JD.com traded volatile and fell as low as 2% before rebounding to a 1.0% gain.

Property developers also lacked direction and traded volatile.

Longfor Group, China Overseas Land and Development, Country Garden, and Sun Hung Kai Properties traded between a decline of 3% and a gain of 1.2%.

 

India Indexes Turned Lower Ahead of Rate Decision

Stocks in Mumbai opened lower amid weak markets in Asia and ahead of rate decisions from the RBI later in the week.

The Reserve Bank of India is expected to hold its key lending rates steady for the sixth time in a row on Thursday.

The central bank is widely anticipated to hold rates, tracking the rate decisions made by the U.S., UK, and Euro Area.

The Sensex index decreased 50.06 points to 72,035.57, and the Nifty index gained 5.90 points to 21,859.70.

On the Mumbai stock exchange, 272 stocks traded at their 52-week highs and 9 stocks traded at their 52-week lows.

The State Bank of India declined 1.1% to ₹642.65 after the largest lender in the country reported a decline in net profit in the latest quarter.

Net profit in the December quarter plunged 35.5% to ₹9,164 crore from ₹14,205 crore a year ago after the bank set aside ₹7,100 crore for its pension liabilities.

Tata Motors gained 6.5% to ₹936.50 after the Jaguar and Land Rover maker reported a surge in its latest quarter profit.

Consolidated profit in the December quarter soared 137.5% to ₹7,025 crore from a year ago.